Zambia is exploring borrowing in Chinese yuan and negotiating a possible currency swap agreement with China as it seeks to deepen financial cooperation and reduce exposure to foreign exchange costs.
Bank of Zambia (BoZ) Governor, Denny Kalyalya, said the discussions formed part of broader efforts to increase the use of the Chinese currency in trade and financial transactions between the two countries.
Speaking on the sidelines of the International Monetary Fund (IMF) Annual Meetings in Bangkok, Thailand, Kalyalya said increased trade flows in renminbi could help facilitate a currency swap agreement, according to Access Bank market commentary.
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He said Zambia was also preparing to settle part of its copper exports to Chinese buyers in renminbi from 2027, beginning with Chinese mining companies that already pay their taxes in the currency.
The proposed arrangements could reduce reliance on the United States dollar in some transactions and potentially lower currency conversion costs.
A currency swap would provide a mechanism for exchanging currencies between the two countries, although the terms and potential scale of any agreement have not been disclosed.
The move comes as some African countries explore greater use of the yuan in trade and debt transactions with China, including proposals to convert existing Chinese debt into the Chinese currency to help manage debt-servicing costs.
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