Zambia’s FX Reserves Hit Record-High But Currency Woes Persist
TLDR
- Zambia’s foreign-exchange reserves reached a record $4.31 billion at the end of 2024, equivalent to 4.6 months of import cover
- Despite this, the kwacha continued its decline, falling 0.2% to 28.83 against the dollar on Thursday
- The currency has become Africa’s fourth-worst performer this year, pressured by rising demand for dollars to pay for energy and food imports
Zambia’s foreign-exchange reserves reached a record $4.31 billion at the end of 2024, equivalent to 4.6 months of import cover. The rise was supported by inflows from the World Bank, African Development Bank, and International Monetary Fund. Despite this, the kwacha continued its decline, falling 0.2% to 28.83 against the dollar on Thursday—its eighth consecutive day of losses and near an all-time low.
The currency has become Africa’s fourth-worst performer this year, pressured by rising demand for dollars to pay for energy and food imports following a historic drought. Zambia, Africa’s second-largest copper producer, has seen a sharp increase in energy imports due to low hydroelectric output. Over 80% of Zambia’s power comes from hydro sources, but dam levels remain critically low. The Kariba Dam currently has less than 10% usable storage.
The Bank of Zambia recently increased the threshold for foreign exchange transactions between banks and clients from $1 million to $5 million to boost dollar liquidity. The move provided brief relief but failed to reverse the broader trend.
Daba is Africa's leading investment platform for private and public markets. Download here
Points clés à retenir
Zambia’s currency struggles underline the limits of strong reserve buffers when structural issues persist. Despite record FX reserves, fundamental imbalances—like high import dependency for fuel and food due to drought-driven power shortages—continue to weigh on the kwacha. With limited domestic power generation and rising import costs, dollar demand is likely to remain elevated. Unless energy supply improves or export earnings rise significantly, the pressure on the currency may persist, posing a challenge for policymakers trying to stabilize the economy.
Vous pensez que quelqu'un d'autre devrait voir ça ?
Investir dans cette opportunité et dans d'autres opportunités à travers l'Afrique
Téléchargez l'application daba finance sur votre mobile via
Passer à l'action.
Télécharger l'application
Entrez en partenariat avec nous
Débloquez des opportunités commerciales passionnantes et un potentiel de croissance.
Rejoindre Daba
Devenez membre de notre communauté dynamique et profitez d'avantages exclusifs.
Contactez-nous
Contactez-nous pour toute demande de renseignements, assistance ou collaboration.