Currency Forecast - ZMW: Gradual Sell-off Ahead - NOV 2017


BMI View: We expect that the Zambian kwacha will continue to sell-off in the months ahead as real rates become less attractive and the country's terms of trade deteriorate modestly. In the long term , while Zambia will benefit from relatively robust growth, structurally high inflation will weigh on economic competitiveness.

Short Term (Three-to-six Months)

We believe the Zambian kwacha has reached the end of its appreciatory trend, and is poised to sell-off gradually through end-2017. While we are revising up our average kwacha forecast for 2017 from ZMW9.75/USD to ZMW9.45/USD this is a reflection of the sharper than expect kwacha rally in recent months rather than our expectations for the future direction of the currency. Indeed, we forecast the currency to end the year at ZMW9.50/USD, representing 3.9% depreciation from the current spot price of ZMW9.13/USD.

Depreciatory Trend Beginning
Zambia - Exchange Rate, ZMW/USD (Weekly)
Source: Bloomberg, BMI

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