Kwacha Outlook Positive

Projections indicate the currency will trade within a narrow range.

By Francis Maingaila ♥️ 

Lusaka, Zambia24  -  (October 18, 2025) — The Civil Society for Poverty Reduction (CSPR) has observed that the Zambian Kwacha, supported by strong global copper and cobalt prices, steady mining inflows, and stable domestic economic conditions, is expected to maintain a relatively stable performance against the US dollar in the coming weeks.

Isabel Mutembo Mukelabai, Executive Director of CSPR, told Zambia24 that the strong performance of the Kwacha is encouraging and should be sustained to ensure affordability of goods and services for most Zambians. 

She explained that the currency’s recent gains help ease the cost of living and reduce exchange rate risk on Zambia’s external debt.

CSPR noted that while speculative trading could create short-term volatility, inflows from the mining sector—particularly USD-denominated tax payments and supplier settlements—are expected to stabilize the currency. 

“Some fluctuations are possible, but the Kwacha is unlikely to experience significant depreciation in the immediate term,” Mukelabai said.

Key factors influencing the Kwacha include speculative positions, strong global demand and limited supply of copper and cobalt, mining inflows, and global oil price movements. 

Domestically, no major policy shocks are anticipated, suggesting relative short-term stability.

CSPR outlined three possible scenarios for October. In the base case, the Kwacha is expected to trade within a narrow band of roughly +/-1.5%. In a bullish scenario, gains could reach up to 1.0% intraday if commodity prices and mining inflows remain strong. 

A bearish scenario could see a 1.0–1.5% intraday depreciation if speculative unwinding accelerates or global risk sentiment shifts.

The organization highlighted copper and cobalt price trends, midweek mining payments, oil price volatility, domestic macroeconomic releases, debt restructuring updates, and the IMF Extended Credit Facility (ECF) review as key developments to watch.

 A favorable outcome of the IMF 6th ECF review could boost investor confidence and attract foreign currency inflows ahead of the farming input procurement season.

CSPR urged the government to maintain fiscal discipline, ensure transparency in debt management, and address electricity supply challenges, which could undermine currency gains. 

“Market participants should expect a narrow trading range, with short-term volatility driven mainly by commodity prices, oil movements, and domestic and global risk sentiment,” Mukelabai concluded.