Currency Outlook in 2018

The last 5 years have been very interesting for the Kwacha. In 2014, many would have forgotten that that our currency lurked in the K5-6 range to the dollar. It is now currently flirting the south of K10 region.

Source Bloomberg

For businesses that have long term strategies of say 5 to 10 years, it is important to project what the exchange rate will be because if some of the inputs into the supply chain come from external markets, the currency rates are something that one has to be all too familiar with. Furthermore, it is in the interest of protecting the company’s value generating prospects going forward.


At the heart of it is our trade position when it comes to imports and exports. Copper has taken the lion’s share of exports revenue. The current spot price is 7059usd per ton. However, our currency has had a mixed fortune regarding the rate when compared to the spot price of copper over the last 5 years. Following the deterioration of the price of copper leading to a rapid escalation of the kwacha against the dollar that saw the currency loss half of its value in a matter of months, achieving a new stability has been on the mind of our Central Bank. Conversely, one would have expected that the rate would return to its old stable level once the price of copper continued to ascend to its old highs. Sadly though, this will not be the case as we continue to grapple with capital flight. Unless this is reigned in off course.

Knowing very well that we are an import dependent country, means that policy makers must continue to look at ways of evening out the balance of exports and import. Not getting this equation right means that there is more pressure on the local currency. The end result is policies that may inadvertently harm businesses in the medium term for the sake of shoring up the currency.

Current market research forecasts ( project that the Kwacha is expected to trade at 10.05 by the end of quarter one 2018. They further estimate it to trade at 10.84 in 12 months’ time. BMI Research and Bloomberg forecast the currency to on average trade at 10.30 by end for 2018.

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