A government push to curb the use of foreign currencies in domestic transactions has sent Zambia’s kwacha near its strongest level in more than two years, Bloomberg reported. Traders sold dollars in response, creating a surge in local currency supply and driving short-term gains.

The kwacha jumped as much as 0.9 percent against the US dollar before settling 0.4 percent higher on the day. It has strengthened more than 2 percent this week, building on last year’s rally, which was supported by record copper prices, the country’s main export.

Market dynamics have been influenced by more than investor sentiment. The Bank of Zambia’s December directive requiring transactions to be settled in kwacha has intensified dollar liquidation, while the temporary shutdown of factories for the Christmas break has reduced demand for imports, further supporting the local currency.

“The combination of regulatory shifts and industrial pauses has created a unique perfect storm for continued appreciation,” said Chipo Shimoomba, a treasury dealer at First Alliance Bank in Lusaka.

The kwacha was one of Africa’s best-performing currencies in 2025, gaining 26 percent against the dollar. Zambia, the continent’s second-largest copper producer after the Democratic Republic of Congo, is among several African nations whose currencies posted double-digit gains against the US dollar.

Zambia’s broader financial markets have also benefited. The Lusaka Stock Exchange delivered some of the highest returns in emerging markets, both in local-currency and dollar terms, aided by strong copper inflows and President Hakainde Hichilema’s ongoing debt restructuring programme. Hichilema is seeking a second term in the August elections.