By Cecilia Chiluba/Zambia/Lusaka
Zambia’s currency has continued to record strong performance in early 2026, buoyed by a combination of improved sovereign credit ratings, Bank of Zambia (BOZ) policy measures, progress in debt restructuring, and rising copper prices.
As of 5th January 2026, the Zambian Kwacha traded at K22.12 against the US dollar, making a 0.43% gain from the previous trading session.
Economist Gerald Soko said the appreciation of the Kwacha largely builds on momentum gained in December 2025, following the lifting of Zambia’s foreign currency default status by international ratings agencies.
Speaking in an interview, Mr. Soko explained that in late November 2025, both Standard & Poor’s and Fitch upgraded Zambia’s sovereign credit rating by several notches, a move that restored investor confidence and supported positive sentiment in the foreign exchange market.
“The sovereign rating upgrade has been a key anchor for the Kwacha’s performance. That positivity filtered through the market in December and created an appreciation bias for the currency,” Mr. Soko said.
He added that the Kwacha’s performance in the first week of 2026 has been further strengthened by recent directives implemented by the Bank of Zambia, which have encouraged increased foreign currency conversions.
“The market is reacting to the current measures rolled out by the Bank of Zambia. We have seen improved supply flows, with market players converting dollars into Kwacha,” he noted.
This improved supply has shifted market dynamics, enabling the central bank to purchase foreign exchange from the market, a reversal from previous periods when the Bank of Zambia was selling FX to support the currency.
“Previously, the central bank was supporting the market by selling foreign exchange. Now, due to increased supply, the Bank of Zambia has turned into a buyer of FX,” Mr. Soko said.
He added that private sector activity remains relatively subdued following the industrial break, further reducing demand for foreign currency and supporting the Kwacha’s appreciation.
