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The Kwacha has reached new lows against the United States dollar, driven by significant electricity imports necessitated by a severe drought and reduced copper production.
In its daily market update on Friday, Access Bank highlighted the ongoing pressure on the local currency.
“The drought has resulted in significant payments for imported electricity and reduced copper production, a key foreign currency earner, weighing on the Kwacha,” the report noted.
Absa Bank echoed similar sentiments, stating that the Kwacha is likely to remain range-bound in the short term, with supply and demand dynamics continuing to influence its position.
“The USD/ZMW interbank was quoted at K28.000/28.050 on the bid and offer respectively and traded at the same levels throughout Thursday’s session,” Absa’s update revealed.
Globally, most currencies have been under pressure as the United States dollar strengthens, supported by robust economic data that dampen expectations for further interest rate cuts by the Federal Reserve.
The Federal funds futures project one more rate cut by June 2025, with a 60 percent chance of another later in the year, but such moves are not guaranteed.
Elevated U.S. Treasury yields, with the 10-year bond trading at 4.67 percent , continue to bolster the dollar.
Meanwhile, South Africa’s rand also weakened on Thursday, trading at 18.87 against the dollar—a 0.9 percent drop from its previous close—amid a strong dollar and disappointing domestic economic data.
The rand earlier touched 18.97, its weakest level since June 2024, raising inflationary concerns among local investors.
Zambia faces similar challenges as external economic conditions and internal constraints, such as drought and reduced copper earnings, continue to exert pressure on the Kwacha.
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