HH’s Kwacha Emerges Africa’s Best Performing Currency
26 February 2024
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By Business Reporter- Zambia’s Kwacha has claimed the title of Africa’s top-performing currency against the United States dollar for the current year.

The surge, amounting to an impressive 13.8%, ha
s propelled the Kwacha to 22.8 against the US dollar in 2024, as per data from the London Stock Exchange Group (LSEG), as reported by ZimLive.

This remarkable feat can be attributed to the decisive actions taken by the Bank of Zambia, the nation’s central bank, which implemented a significant tightening of monetary policy.

Commercial banks’ reserve ratios were raised, and interest rates saw an upward adjustment earlier this month.

These measures were strategically deployed to counteract a decline in the Kwacha, which had been contributing to an uptick in inflation.

Commenting on this stellar performance, Danny Greef, Co-Head of Africa at research firm ETM Analytics, remarked, “The Kwacha’s performance this year has been remarkable.” Analysts are quick to note, however, that the sustainability of the Kwacha’s strengthening hinges on the nation’s ability to attract more foreign investment.

Zambian officials have identified the prolonged debt restructuring, now entering its fourth year, as a significant impediment to foreign investment and a weakening force on the Kwacha.

Despite governmental efforts to stimulate the sector, copper production—the primary foreign exchange earner for Zambia—has also experienced a decline.
Addressing these challenges at a recent public forum, Bank of Zambia governor Denny Kalyalya stated, “The measures that we have taken… are meant to stem some of the demand, which we thought was excessive as we anticipate supply, which mainly comes from the mining sector.”

Although the Kwacha witnessed a marginal weakening last week, slipping from 22.5 to $1, it remained resilient, boasting a strength exceeding 20% compared to the record low of 27.23 recorded on February 6.