Zambia’s kwacha emerges as Africa’s top currency performer against the US dollar in 2024, strengthening by 13.8 to 22.8%. This surge follows the central bank’s decisive monetary policy adjustments, including raising reserve ratios and hiking interest rates, aimed at curbing excessive demand and stabilizing inflation amidst stalled debt restructuring efforts. However, sustained strengthening hinges on attracting more foreign investment to bolster the economy. Analysts highlight the need for clarity in debt restructuring, predicting that resolution will unlock portfolio and fixed investment flows. The government’s initiatives, such as facilitating new investors in key sectors like mining, coupled with fiscal consolidation and balance of payments reforms, are seen as essential for maintaining an attractive policy environment and addressing liquidity imbalances between local and foreign currencies, paving the way for further kwacha gains.
