Market News
Kwacha, naira lead Africa’s currency gains in 2026 - BUSINESSDAY
Zambia’s kwacha and Nigeria’s naira have emerged as Africa’s strongest-performing currencies in the first two months of 2026, signalling a tentative improvement in macro stability across parts of the continent, a BusinessDay analysis of real-time data from African Markets shows.
Out of 17 African currencies tracked year to date to February 27, eight recorded appreciations against the dollar, while the rest weakened — underscoring the still uneven nature of Africa’s foreign exchange recovery.
The Zambian kwacha posted the biggest gain, appreciating 17.7 percent to 18.79 per dollar from the start of the year. Nigeria followed, with the naira strengthening 6.95 percent to about N1,353.4 per dollar.
Namibia ranked third with a 3.95 percent gain, while South Africa and Uganda followed at 3.76 percent and 1.19 percent, respectively. Tanzania and Ghana recorded the steepest depreciations, weakening by 3.99 percent and 2.60 percent.
“African currencies have gradually strengthened, supported by improved financial conditions, stronger foreign exchange inflows from reforms, higher Foreign Direct Investments and favourable commodity prices, alongside a weaker US dollar,” the World Bank said in a recent report.
The multilateral lender added that, looking ahead, the outlook for lower regional inflation hinges on continued moderation in commodity prices, particularly oil and food. It noted that prudent fiscal and debt management, alongside productivity-enhancing reforms, will be critical to sustaining the recent strengthening of regional currencies.
Copper tailwinds drive FX strength
Zambia’s outsized currency rally reflects improving macro fundamentals anchored on easing inflation, firm copper prices and continued policy support.
Annual inflation slowed to 7.5 percent in February — its lowest level since March 2019 — from 9.4 percent previously, according to the Central Statistical Office. The Southern African economy returned to single digit inflation in January for the first time in three years.
The kwacha, already Africa’s second-best performing currency in 2025, has extended its gains by roughly 16–18 percent against the dollar since December. The rally has been supported by central bank actions and record-high copper prices, which have strengthened the country’s external position.
Copper remains the country’s macro anchor, accounting for more than 70 percent of export earnings and roughly a quarter of government revenue. Elevated prices have boosted FX inflows, improved the current account balance and helped contain imported inflation.
Investor sentiment also received a lift after the International Monetary Fund approved a $190 million disbursement last month, effectively closing Zambia’s current financing programme and paving the way for fresh engagement.
Reform momentum underpins naira rebound
Nigeria’s currency recovery reflects improved FX liquidity, tighter monetary conditions and a gradual rebuilding of investor confidence following the sharp naira devaluation in 2024.
The rebound has lifted dollar-denominated equity returns and improved foreign portfolio interest in local assets.
Last October, the naira exited the continent’s top 10 weakest currencies for the first time in nearly two years, supported by stronger reserves, ongoing reforms and improved market liquidity. The currency ranked 11th weakest at about N1,401 per dollar in January.
Inflation dynamics are beginning to respond. Data from the National Bureau of Statistics showed annual inflation eased slightly to 15.1 percent in January from 15.15 percent previously, marking the tenth consecutive monthly decline and the lowest level since November 2020. A firmer currency has helped moderate the cost of imports.
Namibia and South Africa: Rand-linked gains
The Namibian dollar’s appreciation largely mirrors movements in the South African rand due to the long-standing one-to-one currency peg.
Namibia’s currency strengthened 3.95 percent year to date, reflecting improved sentiment toward South African assets and broader emerging-market risk appetite.
The rand itself has benefited in early 2026 from a softer U S dollar, firmer global risk appetite and supportive domestic developments, including resilient commodity export prices, gradual improvements in electricity supply and signs of fiscal consolidation under the Government of National Unity.
South Africa’s inflation backdrop has also turned more benign. Headline consumer inflation eased to 3.5 percent in January from 3.6 percent in December, according to Statistics South Africa, remaining comfortably within the central bank’s target range.
For Namibia, the stronger currency is helping to contain imported inflation by lowering the cost of fuel, goods and services. Annual inflation in the country slowed to 2.9 percent in January 2026, the lowest level since February 2021.
For now, the kwacha and naira stand out as early winners in Africa’s 2026 currency race — but sustaining the momentum will depend on whether supportive global conditions, commodity prices and domestic reforms hold through the rest of the year.
