Kwacha Shows Relative Stability Against the US Dollar Amid Mixed Economic Signals

The Zambian Kwacha has maintained a relatively stable performance against the US dollar, with the interbank rate averaging between ZMW 22.46 and ZMW 22.64 per USD over the course of 19 December 2025, according to market data from leading banks. Retail rates for the dollar hovered around ZMW 22.79 to ZMW 22.86, reflecting minor intra day fluctuations.

Market analysts attribute the stability to a combination of factors. Strong tax revenue collections in the third quarter, particularly from company taxes and withholding taxes, have bolstered government liquidity, supporting demand for the Kwacha. Meanwhile, domestic debt issuance through government securities rose by 4.16 percent in Q3 2025 to K252.8 billion, providing local investors with attractive options and limiting excessive reliance on foreign currency.

However, external pressures remain. Zambia’s Central Government external debt stock reached US$16.04 billion by Q3 2025, while disbursements from multilateral creditors continued, increasing the supply of foreign currency. Meanwhile, the Eurobond servicing obligations, alongside arrears on external debt, continue to put some strain on forex reserves.

Overall, the Kwacha’s stability reflects a delicate balance between sustained domestic revenue mobilization, controlled government spending, and careful management of external debt obligations. Analysts caution that while current trends are supportive, large external payments or delays in multilateral disbursements could create volatility in the near term.