Kwacha holds firm amid easing volatility, but pressures linger

The Zambian Kwacha continues to trade within a relatively stable range, supported by improving foreign exchange inflows and easing inflation, according to a market update by Access Bank Group. The report noted that the local unit was currently pivoting around its 50-day moving average at approximately 19.2250 against the US dollar, with volatility showing signs of subsiding. “This stability has been underpinned by increased FX inflows from the mining sector, alongside recent policy interventions aimed at stabilising the currency,” the report stated.

However, the outlook for the Kwacha remains cautiously balanced.Analysts warn that persistent structural demand for the US dollar—driven largely by import requirements and fiscal financing pressures—could re-emerge and limit the potential for sustained appreciation in the near to medium term. In regional currency markets, the South African Rand has shown limited directional movement. The USD/ZAR pair is currently trading around the 16.41 level, having edged higher and defied expectations of a deeper pullback below 16.35.

Technical indicators suggest resistance for the pair is likely near 16.65, while support is seen at 16.35, effectively containing short-term price movements. Broader risk appetite has stabilised somewhat amid diplomatic developments, although volatility in emerging market currencies remains elevated compared to pre-conflict levels. Looking ahead, the Rand is expected to maintain a neutral to slightly weaker bias against the US dollar.

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“Key factors likely to influence its trajectory include developments around the Strait of Hormuz and upcoming domestic economic data. Cross-currency pairs such as GBP/ZAR and EUR/ZAR are also expected to mirror these trends, with performance closely tied to global energy and commodity price movements,” according to the report. On the global front, the US dollar has softened slightly, reflecting improving sentiment around possible renewed negotiations between the United States and Iran.

The Bloomberg Dollar Spot Index edged lower after Donald Trump signalled openness to restarting diplomatic talks following recent contact with Tehran. “Ongoing geopolitical tensions, including the US blockade of the Strait of Hormuz, continue to sustain risk premiums in global markets and provide underlying support for the greenback,” the report indicated.

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