LUSAKA – In a remarkable turnaround, the Zambian Kwacha has surged on the foreign exchange market, reaching K23.46 after weeks of trading at significantly lower levels.
Market data collected by the Zambia National Broadcasting Corporation (ZNBC) from various bureaus indicates that the dollar is now being bought at K23 and sold at K23.46.
Analysts and economists are pointing to governmental and central bank interventions as the primary drivers behind this sudden appreciation.
Bankers Association of Zambia (BAZ), CEO Ronald Mwanza, attributed the Kwacha’s upward momentum to recent actions taken by both the government and the central bank.
Mwanza specifically cited the increase in the statutory reserve ratio, highlighting the government’s decision to raise this ratio in response to sustained high demand for foreign exchange.
He noted that this move has effectively tightened liquidity in the market, lending support to the Kwacha’s appreciation.
Economist Noel Nkoma echoed Mwanza’s views, emphasizing the fiscal measures implemented by the government.
Nkoma pointed out that the government’s decision to withdraw excess liquidity from commercial banks has created room for the Kwacha to strengthen further.
The recent surge in the Kwacha follows the Bank of Zambia’s decision earlier this month to raise the statutory reserve ratio from 17 percent to 26 percent, which became effective on February 5th.
This proactive step by authorities signals a concerted effort to address challenges posed by high demand for foreign currency.
Market participants and stakeholders have greeted the Kwacha’s sudden appreciation with optimism, viewing it as a positive development for Zambia’s economy.
However, analysts caution that sustained efforts will be necessary to maintain this momentum and ensure stability in the foreign exchange market.
As attention shifts to the effectiveness of ongoing fiscal and monetary measures in supporting the Kwacha’s gains, all eyes remain on the trajectory of Zambia’s currency and its implications for economic growth.