Zambia’s Kwacha Emerges as Top-Performing African Currency Amid Aggressive Monetary Policy
Zambia’s kwacha has emerged as the top-performing African currency against the U.S. dollar in 2024, with a remarkable surge of 13.8% to 22.8, according to LSEG data.
This surge is attributed to the central bank’s aggressive monetary policy tightening, which included measures such as raising commercial banks’ reserve ratios and increasing interest rates to counter the currency’s decline and rising inflation.
Analysts highlight the importance of sustaining the kwacha’s strengthening by attracting more foreign investment. Zambian officials acknowledge that prolonged debt restructuring and declining copper production have hindered foreign investment and contributed to the kwacha’s previous weakening.
Bank of Zambia governor Denny Kalyalya emphasized that the measures taken aim to balance excessive demand with anticipated supply from the mining sector.
Economist Munyumba Mutwale noted that increased foreign currency flows are necessary for the kwacha to make further gains, with expectations of stabilization around 21-22 per dollar.
Efforts to attract new investors for Mopani and Konkola Copper Mines, along with exploration projects by companies like KoBold Metals, indicate ongoing initiatives to boost the sector and strengthen the kwacha.
Despite a slight weakening this week, the kwacha remains over 20% stronger than its record low reached in February, signaling positive momentum for Zambia’s currency.
