Global copper prices are of key importance to the strength of the Zambian currency, the World Bank (WB) indicates in its Zambia Economic Brief from June 2016.
“As copper prices fall, the kwacha typically depreciates and as copper prices rise, it typically appreciates,” the report notes.
Other important factors affecting the Zambian currency include:
- The relative strength of the USD against other currencies.
- Purchases at the Zambian foreign exchange markets. Since the Zambian FOREX markets are ‘thin’ (i.e. there are often times of low demand), and so relatively small purchases of foreign currency can move the exchange rate considerably.
- Government regulation and control of the market via the Bank of Zambia (BoZ).
- Seasonal factors.
Zambia Currency Performance
The Zambian currency recorded an overall depreciation of 62% between the start of 2015 and May 2016.
The Zambian kwacha reached ZMW10.4 per USD at the end of May 2016. On September 12th 2016, the kwacha traded at around ZMW10.10.