Zambia’s Kwacha is Africa’s best-performing currency against the United States dollar so far this year after the Bank of Zambia (central bank) sharply tightened monetary policy.

As reported by source , the Kwacha has rallied 13.8% to 22.8 against the US dollar in 2024, according to LSEG data.

This came after the Bank of Zambia raised commercial banks’ reserve ratios and then hiked interest rates earlier this month, in a bid to reverse a decline in the currency that had pushed up inflation.

Danny Greef, Co-Head of Africa at research firm ETM Analytics, said “The Kwacha’s performance this year has been remarkable”.

Analysts said the Kwacha would strengthen sustainably only if the country attracts more foreign investment.

Zambian officials have blamed the country’s stalled debt restructuring, now in its fourth year, for preventing overseas investment and weakening the Kwacha.

However, copper production, Zambia’s major foreign exchange earner, has also fallen despite government efforts to boost the sector.

Speaking at a public forum last week on Tuesday, Bank of Zambia governor Denny Kalyalya said:

The measures that we have taken… are meant to stem some of the demand, which we thought was excessive as we anticipate supply, which mainly comes from the mining sector.

The Kwacha weakened slightly last week from 22.5 to $1 but was still more than 20% stronger than the record low of 27.23 reached on February 6.