Kwacha Extends Rally as Dollar Supply Improves, Market Data Show

The Zambian kwacha continued to firm on Tuesday, with intraday exchange-rate data from commercial banks showing a gradual strengthening against the US dollar, underpinned by improved foreign currency supply and easing demand pressures.

According to Daily Commercial Banks Exchange Rates for 06 January 2026, the market-average interbank selling rate eased from about K21.05 per dollar in the morning to around K20.99 by mid-afternoon, while retail selling rates also trended lower over the course of the trading day. Several banks quoted interbank sell rates dipping below K21.00, a level that has increasingly acted as a near-term psychological anchor for the currency.

Market participants say the appreciation reflects a confluence of structural and seasonal factors rather than a single trigger.

At the core is stronger foreign-exchange inflows, largely from the mining sector. Copper prices have remained elevated on global markets, boosting export receipts and increasing dollar liquidity in the domestic banking system. Mining companies’ routine conversion of export earnings into kwacha to meet local obligations has added steady supply to the market, easing pressure on the local unit.

The currency has also benefited from improving sentiment around Zambia’s external position, following tighter fiscal management and clearer signals on debt servicing. Recent policy measures including allowing some mining taxes to be paid in Chinese yuan have reduced conversion costs and helped smooth government foreign currency outflows, indirectly supporting the kwacha.

On the domestic front, seasonal agricultural flows are beginning to matter. As maize marketing gathers pace, exporters and traders are converting foreign currency into kwacha to finance local purchases, adding to supply. At the same time, dollar demand from importers has remained relatively contained, reflecting subdued non-essential imports and cautious corporate spending early in the year.

Intraday movements across banks also point to narrowing bid offer spreads, particularly in the interbank market, suggesting improved liquidity and reduced volatility. By 15:30, several institutions including Access Bank, ABSA, First Capital Bank and Zanaco were quoting interbank sell rates at or below K20.95, compared with levels closer to K21.10 earlier in the day at some banks.

Analysts caution, however, that while the near term outlook remains supportive, the kwacha’s trajectory will continue to depend on copper price dynamics, export volumes, and the pace of government and private-sector dollar demand. Any reversal in commodity prices or a spike in import demand could quickly test the currency’s resilience.

For now, the data suggest a market that is incrementally repricing the kwacha stronger, driven less by speculation and more by improving fundamentals a shift that has given the local unit one of its most sustained runs of stability in recent months.