By Cecilia Chiluba/Zambia/Lusaka
Zambian Kwacha has edged lower against the United States dollar, pausing its recent extended rally as short-term domestic pressures and shifting global financial conditions outweigh otherwise supportive macroeconomic fundamentals.
According to Trading Economics, the US dollar-Zambian Kwacha exchange rate rose to 20.0100, today January 20, 2026, up 0.05% from the previous session.
Over the past month, the Zambian Kwacha has strengthened 11.36%, and is up by 28.68% over the last 12 months.
Economist Esther Banda said the currency’s modest depreciation reflects a normal market correction following several weeks of strong appreciation, rather than a reversal of Zambia’s improving economic outlook.
“After several weeks of strong gains, some market participants locked in profits. This is a normal occurrence and does not signal renewed instability,” Dr. Banda said.
Speaking in an interview, Dr. Banda noted that seasonal foreign exchange demand has also contributed to the recent weakness.
She said higher US dollar requirements for fuel imports, external debt servicing, and end-month corporate settlements temporarily increased pressure on the Zambian currency.
On the external front, Dr. Banda pointed to renewed strength in the US dollar, driven by expectations that US interest rates will remain higher for longer.
The economist explained that the shift has weighed broadly on emerging and frontier market currencies, including the Kwacha.
She added that liquidity dynamics in the domestic foreign exchange market have also played a role, as short-term mismatches between export-related inflows and market demand can trigger brief volatility even when underlying fundamentals remain intact.
Overall, Dr. Banda stressed that the recent movement reflects short-term market dynamics, not a breakdown of the positive momentum underpinned by fiscal consolidation and improved macroeconomic management.
“Sustained exchange rate stability will depend on structural reforms and consistent policy implementation, rather than short-term interventions,” she said.
She underscored the importance of continued fiscal discipline, including controlling budget deficits and public debt levels, to ease inflationary pressures and curb excessive demand for foreign exchange.
