• Zambia’s kwacha weakened 3.4% in October to around K20.37 per US dollar after the country recorded a US$186.4 million trade deficit in September, reversing a US$48 million surplus in August
• Moody’s upgrade of Zambia to Caa1, progress towards a US$1.472 billion IMF programme and copper prices above US$14,000 per tonne are strengthening the country’s external financing capacity and sovereign credibility
• Zimbabwe is benefiting from strong mineral receipts and rising reserves. External arrears, limited access to concessional finance and the absence of a sovereign credit rating continue to restrict the wider financing gains that can emerge from stronger commodity earnings

Harare- Zambia’s kwacha lost 3.4% against the United States dollar in October, ending the month around K20.37, as foreign currency demand increased and supply into the market softened.

The movement came during a period of significant improvement in Zambia’s broader sovereign position. Copper prices remained above US$14,000 per tonne, Moody’s upgraded the country’s sovereign credit rating and the International Monetary Fund reached agreement with Lusaka on a proposed US$1.472 billion financing programme.

These developments operate through different channels.

The exchange rate responds directly to foreign currency entering and leaving the domestic market. Zambia’s September trade position weakened as exports declined 8.1% to about US$1.61 billion and imports increased 5.4% to US$1.79 billion. This produced a trade deficit of about US$186 million after a US$48 million surplus in August.

Capital goods imports increased sharply during the month. Higher demand for machinery, equipment, fuel and agricultural inputs increased the amount of foreign currency required by businesses. Access Bank also identified weaker foreign currency supply and reduced attractiveness of kwacha denominated assets among the pressures affecting the currency.

Copper strengthens the opposite side of that equation through export earnings.

Prices above US$14,000 per tonne increase the value of Zambia’s mineral exports and improve the capacity of mining companies to generate foreign currency. They also support government revenues through mining taxes and improve the country’s ability to build international reserves.

The relationship is not immediate or mechanical. Higher copper prices increase Zambia’s potential foreign currency earnings. Import requirements, dividend payments, debt servicing and capital flows determine how much of those earnings remains available inside the domestic foreign exchange market.

September illustrated that transmission clearly. Strong copper prices increased the value available from exports at the same time that investment and consumption related imports absorbed more foreign currency.

Zambia’s improving credit rating works through another channel.

Moody’s upgraded the sovereign from Caa2 to Caa1 and maintained a positive outlook, reflecting progress in debt restructuring, fiscal management and macroeconomic stabilisation. The country remains within speculative grade territory, although the upgrade represents another step away from the sovereign default that began in 2020.

A sovereign rating gives international lenders and investors an independent benchmark for pricing country risk. Improvements in that rating can gradually reduce the premium attached to government borrowing. The effect can extend into the domestic corporate sector because sovereign risk usually forms part of the reference point used to price external capital for banks and companies.

The IMF programme reinforces that process.

Zambia reached agreement with IMF staff in October on a proposed 36 month Extended Credit Facility valued at US$1.472 billion. The programme would provide concessional financing and support continued reserve accumulation, fiscal management and debt rehabilitation.

The IMF reported Zambia’s gross international reserves at about US$6.1 billion in September. Inflation had also returned closer to the central bank’s target range and economic growth for 2026 was projected at 5.6%.

Copper earnings, IMF financing and sovereign rating improvement therefore form parts of the same financing architecture.

Copper generates export income. IMF support adds concessional external funding and policy credibility. The sovereign rating provides markets with a measure of the progress made in restoring Zambia’s ability to service external obligations.

The kwacha remains exposed to changes in the supply and demand for foreign currency inside that architecture. October’s depreciation reflects the immediate balance between those flows rather than the complete condition of Zambia’s sovereign balance sheet.

Zimbabwe provides a useful regional comparison.

Foreign currency inflows reached about US$15.9 billion during the first nine months of 2026 against payments of approximately US$11.6 billion. International reserves have increased to around US$2 billion, supported by strong gold production and higher receipts from mining and other exports.

These inflows have improved domestic foreign currency availability and supported stability in the ZiG.

Zimbabwe has not achieved the same transmission into sovereign financing.

The country remains in external debt distress and carries substantial arrears to international financial institutions and bilateral creditors. Its current IMF Staff Monitored Programme does not provide financing. Zimbabwe also remains outside normal international sovereign debt markets and does not have a widely recognised sovereign credit rating that provides investors with an external benchmark for pricing government risk.

This limits the distance that stronger mineral receipts can travel through the financial system.

Gold and other commodity exports can increase reserves, improve foreign currency availability and strengthen the current account. Resolution of external arrears would add another transmission channel by restoring access to concessional funding and creating a path towards normal sovereign borrowing.

Zambia’s experience offers a useful distinction for Zimbabwe and other commodity dependent economies. Mineral earnings provide foreign currency. Sovereign rehabilitation determines how those earnings interact with debt markets, concessional funding and the wider cost of capital.

The 3.4% fall in the kwacha does not change that relationship. Zambia is rebuilding the financial architecture around its commodity earnings. Zimbabwe has strengthened the commodity and reserve side of its external position. Progress on arrears resolution and international financial reengagement would allow those gains to extend beyond currency stability into the pricing and availability of capital.

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