By Mubanga Mubanga
Bank of Zambia (BoZ) Denny Kalyalya has attributed the appreciation of the Kwacha to a weaker US Dollar on the global market.
And BOZ has maintained the Monetary Policy Rate at 14.5 percent.
Speaking during the Monetary Policy Rate press briefing in Lusaka on Wednesday, Dr Kalyalya said increased foreign exchange supply as well as improved investor sentiments were also contributing to the appreciation of the Kwacha.
“What we see, in the second quarter, the Kwacha appreciated by 14.4 percent, against the US Dollar. Compared to depreciation of 4 percent in the first quarter of this year. So on the right of the screen, you see this being depicted in the chart. We draw that line there, and we see the first part, that is what we are talking about,” Kalyalya said. “What is happening in the exchange rate, it is appreciating very steadily and which appreciation is attributed to increased foreign exchange supply, particularly from the mining sector, as well as improved investor sentiments. And a weaker US Dollar in the globe market. So many countries, including ours, ourselves are benefiting from that movement in the Dollar.”
And Kalyalya said the Monetary Policy Rate Committee decided to maintain the policy rate at 14.5 percent to consolidate gains from inflation.
“While recognising these positive developments, the Committee noted that at the current level, inflation is well above the 6-8% target band, and at the same time, uncertainties associated with global trade policies and persistent geopolitical tensions remain,” Kalyalya said.
“The Committee also observed that, although market expectations of inflation have moderated, they remain high relative to the target band. The Committee, therefore, decided to maintain the Policy Rate at 14.5 percent.”
Kalyalya said inflation dropped in July to 13.0 percent from 16.5 percent in March.
“Inflation declined to 14.1% in June from 16.5% in March In July, inflation dropped further to 13.0%,” Kalyalya said.
He said the key drivers for this outturn were improved supply of maize, lower fuel prices and appreciation of the Kwacha against major currencies.”
Kalyalya said in the first quarter of 2025, BOZ had gold total value of $ 315.8 million.
“During Q2 2025, 77.76kg of gold, with a market value of USD8.2 million, was purchased. This brings the market value of the total holdings to USD315.8 million since the Bank embarked on purchasing locally produced gold in December 2020,” he said.
Meanwhile, Kalyalya said Zambia’s gross international reserve stood at $4.7 billion which was an equivalent of 4.6 months of import cover at the end of June compared to $4.5 billion at the end of March which was equivalent to 4.6 months of import cover.
