Nobody announces the kwacha’s closing rate, not even the Bank of Zambia. It is the last price at which banks agreed to swap dollars for kwacha, and it depends on who turned up that day with dollars to sell and who turned up with bills to pay.
KEY TAKEAWAYS
- The kwacha’s end-of-day rate is the price of the last deals struck between commercial banks on the interbank market. The Bank of Zambia publishes reference rates but does not fix the price.
- On any given day the rate turns on the balance between dollar sellers (mines, exporters, companies converting for salaries and taxes) and dollar buyers (fuel importers, manufacturers, firms paying foreign suppliers and lenders).
- Concentrated demand can move the rate fast: on 6 October the kwacha fell as much as 6% in one session, to 21 per dollar, after temporary foreign exchange waivers for energy importers ended.
- Copper prices, oil prices, the global strength of the US dollar and the Bank of Zambia’s interest rate decisions shape the backdrop, but they reach the market through those daily flows.
- Month-end conversions should keep the kwacha in a narrow range this week. The reinstatement of VAT on fuel on 1 December and the next policy meeting on 25 to 26 November are the next tests.
The kwacha’s closing rate is set by trading between Zambia’s commercial banks on the interbank foreign exchange market, where dealers buy and sell dollars for mining houses, importers, government agencies and their own books. The Bank of Zambia does not decide it. The figure you see at the end of the day is where the last deals were done, and most days it answers one plain question: were there more dollars for sale than people wanting to buy them?
On Friday 23 October the Bank of Zambia’s mid-rate stood at K20.1145 to the dollar. This year has shown how far that number can travel. The kwacha opened 2026 at about K22.19, strengthened to roughly K17.3 by mid-June, and has since given back a large part of the gain. Even so, it remained the best performer among 12 African currencies tracked by The Rio Times, up 14.8% between 31 December and 9 October.
Where the price is actually made
Every bank that deals in foreign currency quotes two prices: a bid, at which it will buy dollars, and an offer, at which it will sell. On a quiet Friday earlier this month, Absa Bank Zambia reported the kwacha trading at K19.85 and K19.90 for the whole session. Nothing moved because the dollars on offer roughly matched the dollars wanted.
The Bank of Zambia sets the rules of this market rather than the price. Under its Interbank Foreign Exchange Market Rules, revised in June 2024, banks must update the rates on their retail boards at 09:30, 12:30 and 15:30, and keep those retail rates wide enough that the interbank price sits inside them. Large deals, above US$5 million since March 2025 when the central bank raised the threshold from US$1 million, can be priced by negotiation between bank and client.
That 09:30 snapshot carries legal weight. Since 26 December 2025, the Bank of Zambia Currency Directives have required domestic transactions to be settled in kwacha. A contract may still be priced in dollars, but where the parties have not agreed which market rate applies, the central bank’s 09:30 mid-rate becomes the reference.
Who walks in with dollars, and who walks in needing them
Think of each trading day as a queue on both sides of the counter.
| Bringing dollars to the market | Taking dollars out of the market |
|---|---|
| Mining companies converting export earnings to pay wages, local suppliers and royalties | Fuel importers paying for petrol, diesel and jet fuel, all bought in dollars |
| Exporters of agricultural and manufactured goods | Manufacturers and retailers paying for imported inputs and stock |
| Companies converting for month-end salaries and tax payments due in kwacha | Firms paying foreign loans, dividends, freight and service fees |
| Foreign investors buying government securities | Investors selling securities and taking money home |
| The Bank of Zambia, when it chooses to sell from reserves | The Bank of Zambia, when it buys to add to reserves |
Timing matters more than volume. Mining houses do not sell dollars every morning. They convert when their own payment calendar requires it, and that calendar bunches up near month-end, when salaries and taxes fall due. Traders polled by Reuters last week expected the kwacha to stay range-bound for exactly that reason, as corporates sold dollars for month-end payments, even though banks were selling the dollar at K20.37, up from K20.18 a week earlier.
Mining tax is a special channel. Under the 2025 directives, mines may pay their taxes by selling foreign currency directly to the Bank of Zambia at its published mid-rate. Those dollars go into the reserves instead of the interbank pool, which gives the central bank more to work with when it decides to step in. Governor Denny Kalyalya told the September policy briefing that about US$1.2 billion in mining sector revenue had added to foreign exchange supply in the third quarter, when the kwacha appreciated 8.3%.
On the buying side, nobody is more regular than the fuel importers. Zambia imports all of its refined petroleum, and the Energy Regulation Board’s October review showed the reference price of petrol rising to US$121.58 a barrel. Every litre sold at a Lusaka pump eventually needs dollars from the interbank market.
What 6 October taught the market
The clearest recent illustration came on Tuesday 6 October. For part of the year, energy importers had operated under temporary foreign exchange waivers. When those ended, their demand arrived in the commercial market all at once. The kwacha fell as much as 6% in a single session, its biggest intraday drop in more than three years, and touched 21 per dollar before recovering to about 19.84, according to Bloomberg. It was the sixth straight day of losses, helped along by a stronger US dollar and high oil prices.
No fundamental changed overnight. Copper was still selling at around US$14,000 a tonne. What changed was the queue: a large group of buyers turned up in a market that was not deep enough to absorb them at the previous price. Once sellers saw the rush, some held back their dollars, expecting a better rate later. That is how a day’s closing price can overshoot, and why the same currency can recover much of the loss before lunch.
The Bank of Zambia’s hand
Zambia runs a floating exchange rate, with the central bank stepping in to smooth sharp swings rather than to defend a particular level. The 2024 rules allow it to tell banks in advance when it will be in the market, and it has more ammunition than in recent years: gross international reserves reached a record US$6.5 billion in February 2026.
Interest rates work more slowly. On 30 September the Monetary Policy Committee cut the policy rate by 250 basis points to 10.75%, from 13.25%, with inflation at 6.1% and inside the 6 to 8% target band. Bloomberg described it as the deepest cut since at least 2012. Lower yields on Treasury bills make kwacha assets less attractive to foreign portfolio investors over time, which can reduce one source of dollar inflow. In my reading, the October weakness owes far more to import demand than to the rate cut, but the cut removes some of the cushion that high yields used to provide.
The world outside Zambia
Copper accounts for roughly seven of every ten dollars Zambia earns from exports, so its price sets how many dollars the mines eventually bring home. Oil works on the other side of the ledger, deciding how much the fuel importers have to buy, and its effect is sharper when the US dollar is rallying against everything. On those days most emerging market currencies weaken together, and the kwacha rarely escapes.
None of these moves the kwacha by itself in a given afternoon. They change the size of the queues. A rise in copper prices today may only show up in the kwacha weeks later, when the extra export earnings are converted.
Why your bank’s rate is not the screen rate
If you buy dollars at a branch or a bureau de change, you will pay more than the interbank figure quoted in the news. Banks add a retail margin, and the rules cap it from both sides: a bank may not buy dollars from retail and corporate clients above its current interbank bid, nor sell to them above its posted board rate. Bureaux set their own prices within the market. The gap between what you pay and the headline number is the cost of being a small buyer in a wholesale market.
Quick answers
Who sets the kwacha exchange rate?
Commercial banks trading with one another on the interbank market. The Bank of Zambia publishes buying, selling and mid-rates and can buy or sell dollars, but it does not fix the price.
What time is the official reference rate set?
The Bank of Zambia’s 09:30 mid-rate is the default reference for contracts settled in kwacha. Banks also update their retail boards at 12:30 and 15:30.
Can anyone predict where the kwacha will close today?
Not with precision. Dealers watch for large known flows, such as month-end conversions, fuel import payments and central bank announcements, which tell them which way the day is likely to lean.
What to watch next
Month-end conversions should keep the kwacha in a narrow band this week. After that, three dates matter. The Energy Regulation Board’s November review will show whether the October fuel increases bit into import volumes. The Monetary Policy Committee meets on 25 and 26 November. And VAT on fuel returns on 1 December, which will push pump prices up and, through them, the cost of almost everything that moves by road.
If you run a business that pays suppliers in dollars, the practical point is about timing. The last days of the month, when mines and large companies convert dollars to meet kwacha bills, are usually when supply in the market is deepest. Watching that calendar, and the date of the next fuel review, will tell you more about your costs than checking the rate every afternoon. A week like 6 October is a reminder that the pattern can break.
Related coverage: The Kwacha’s October Slide: Why Copper Dollars Are Not Enough · Fuel Price Shock Hits Zambia’s Pump Stations, Carrying Multi-Layer Effects · Why the money finishes before the month ends
About the author
Lubinda Sinyani
Economist, Researcher and Governance Specialist | Lusaka, Zambia
Lubinda Sinyani is a Zambian economist and researcher with experience in public sector research, economic policy, auditing and strategic communication. He sits on the Anti-Corruption Commission of Zambia’s Board Technical Committee on Corruption Prevention and Communication, and was Vice Chairperson of the Economics Association of Zambia’s National Economic Summit from 2019 to 2021. He holds a Specialist Degree in Economics and Law from Moscow Region State Institute of Humanities and Social Studies, recognised by ZAQA as equivalent to a Master’s degree.
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