• Recent gains in the Kwacha can be attributed to measures implemented by Bank of Zambia such as increase in the Statutory Reserve Ratio and MPR.
• Other strategies to contain the depreciation include implementation of the Export Proceeds Tracking Framework.
• It is not clear how far this will go as the measures that have been put in place require additional support to be sustainable.

A Financial Analyst has predicted that the Kwacha will not drop below the K22 rate to a dollar despite the positive trajectory observed in the last seven days.
Speaking in an interview with Money FM News, Trevor Hambayi said the recent gains in the Kwacha can be attributed to the measures implemented by Bank of Zambia such as an increase in the Statutory Reserve Ratio for financial institutions and Monetary Policy Rate.
Mr. Hambayi notes that other strategies that have been put in place to contain the depreciation of the local unit include the implementation of the Export Proceeds Tracking Framework which was implemented on 1st January, 2024.
He however said it is not clear how far this will go as the measures that have been put in place require additional support to be sustainable.
“Some of the measures that have been put in place are beginning to take effect. There are three areas that the Central Bank has been implementing strategies to try and contain the continued depreciation of the Kwacha with the first being the export monitoring framework, statutory reserve ratio increment for financial institutions and the increase in the Monetary Policy Rate.”
“We do not know actually in terms of the demand where the Central Bank has released additional funds into the market to stabilize the currency but I think those are the factors that are speaking to this appreciation. To what extent they will continue to push the appreciation we are not very sure. I do not think that the Kwacha will drop to the K22 rate to a dollar because the measures require additional support for them to be sustainable which is to create a trade balance that we might be exporting more,” Mr. Hambayi explained.
He also called on the mining sector to come on board and ramp up production so as to increase foreign exchange (FOREX) supply on the market.
“At some point we need to get the mining sector to come on board in terms of productivity to increase the supply of foreign exchange,” he stated.
The local unit has recently experienced its longest rally in five days since April 2023, which has resulted in a decline of 5.63% in the Kwacha/US dollar exchange rate over the course of seven days, to trade at K24 from the highs of K27.