Recent global currency movements have been shaped by a mix of central bank policy decisions, commodity price trends, and changing market sentiment. 

FEbruary 2026 Exchange Rate Update: What Mobility Teams Should Be Watching

Commodity-exporting economies such as Zambia, Botswana, and Norway saw currency appreciation supported by stronger export revenues and policy stability. Meanwhile, currencies in economies facing inflationary pressures, sanctions, or fiscal imbalances, including Iran and Libya, continued to weaken in the foreign exchange market.

Understanding these trends is important for organizations managing global mobility programs, as exchange rate fluctuations can influence cost-of-living adjustments, assignment allowances, and compensation planning for international employees.

Key Currency Highlights

• Zambian Kwacha (ZMW): Strengthened due to increased copper export revenues and de-dollarization reforms.

• Botswana Pula (BWP): Appreciated following exchange rate management and improved liquidity conditions.

• Norwegian Krone (NOK): Supported by rising energy prices and stable monetary policy.

• Australian Dollar (AUD): Remains stable amid elevated inflation expectations and strong commodity exports.

• Iranian Rial (IRR): Continues to depreciate due to sanctions, inflation, and reduced oil revenues.

• Libyan Dinar (LYD): Weakened as fiscal pressures and increased demand for foreign currency weigh on the economy.

Which Currencies Are Appreciating or Depreciating?

Why Is the Zambian Kwacha Strengthening?

The Zambian kwacha saw a meaningful appreciation recently, driven primarily by a surge in foreign exchange inflows and shifting domestic currency behavior. Strong copper export receipts—bolstered by elevated global prices—significantly improved the supply of hard currency, relieving pressure in the FX market. Complementing this, the Bank of Zambia’s late 2025 currency directive reshaped market incentives by encouraging businesses and households to convert foreign holdings into kwacha, strengthening domestic demand for the local currency. The introduction of yuan based mining tax payments further broadened Zambia’s FX sources, reducing reliance on a single currency channel. As market confidence improved, precautionary dollar buying diminished and trading conditions stabilized. Together, these elements created a more supportive environment for the kwacha, with gains driven by robust export linked inflows, decisive de dollarization reforms, and a notable shift in sentiment.

What Is Driving the Botswana Pula’s Appreciation?

In Botswana, the pula’s appreciation reflected the combined influence of exchange rate engineering and supportive market conditions. The Bank of Botswana continued to leverage its crawling band framework, which, through wider trading margins and a recalibrated currency basket, helped temper exchange rate volatility. Policymakers reinforced this stability by implementing liquidity focused measures: longer term repo operations improved funding predictability, while tweaks to the credit facility rate structure made short term borrowing more efficient. These efforts reduced dependence on direct central bank intervention and strengthened overall market functioning. Seasonal movements—particularly early year trade settlements and institutional portfolio repositioning—added upward momentum. Against this backdrop, the pula’s performance underscored how policy calibration, enhanced liquidity conditions, and cyclical market forces converged to lift the currency.

Why Has the Norwegian Krone Strengthened?

The Norwegian krone’s recent appreciation unfolded against a backdrop of firming commodity fundamentals and renewed confidence in Norway’s broader economic outlook. Rising energy prices improved the country’s terms of trade, drawing sustained investor interest toward Norway’s export oriented economy. Norges Bank’s steady policy stance reinforced the krone’s appeal by preserving relative rate stability and limiting monetary uncertainty. Meanwhile, global currency markets were undergoing shifts in risk appetite, prompting investors to seek alternatives to certain major reserve currencies—opening the door for greater exposure to the krone. These cross currents translated into stronger market performance. As commodity strength, rate stability, and global diversification trends aligned, they collectively supported the krone’s upward movement throughout the month.

Why Is the Australian Dollar Remaining Strong?

The Australian dollar is maintaining a strong exchange rate due to several supporting factors. Inflation expectations remain above the Reserve Bank of Australia’s target range, reinforcing market expectations that interest rates will stay higher for longer. At the same time, global sentiment has shifted in favor of currencies linked to commodities, including the Australian dollar. Key exports such as iron ore, thermal coal, and liquefied natural gas are performing well, strengthening Australia’s trade position and strengthening the currency. In addition, monetary policy expectations suggest the Reserve Bank is less inclined to cut interest rates in the near term, further supporting the dollar.

Why Is the Iranian Rial Depreciating?

Extreme inflation, ongoing sanctions, and reduced oil revenues have driven a significant decline in the value of the Iranian rial. In recent months, U.S. sanctions have continued to weaken the currency by restricting Iran’s oil exports, which serve as a critical source of foreign exchange earnings. These restrictions have reduced the country’s access to foreign currency and heightened pressure on the rial. As a result, persistent inflation and low export revenues have destabilized the broader economy and accelerated the currency’s depreciation.

What Is Causing the Libyan Dinar to Weaken?

The Libyan dinar has weakened recently, and the government largely attributes the decline to uncontrolled spending outside the approved national budget. Officials argue that this spending has exceeded the economy’s capacity and increased demand for foreign currency, putting pressure on the exchange rate. As a result, prices have risen and many citizens have experienced reduced purchasing power of the dinar. Government leaders have debated proposals for new taxes, but several analysts warn that such measures could further strain living standards. The Prime Minister has announced an upcoming cabinet reshuffle to improve overall government performance amid these economic challenges, expressing hope that it will help stabilize the economy and support the dinar. 

Frequently Asked Questions

What causes a currency to appreciate?

Currencies typically strengthen when a country experiences strong export revenues, rising commodity prices, higher interest rates, or increased investor confidence.

Why do commodity prices affect currencies?

Countries that export commodities often see their currencies appreciate when global prices rise because export revenues increase foreign currency inflows.

How do sanctions affect exchange rates?

Sanctions can restrict trade and access to foreign currency, reducing economic activity and often leading to currency depreciation.

How Are Companies Approaching COLA Updates Today?

In our recent Long Term Assignment Survey, we asked companies how frequently they review COLA and whether they monitor exchange rate changes between scheduled updates.

What we see is a range of practices. Many organizations follow an annual or semi annual review cycle. Some review more frequently. Others revisit COLA only when economic conditions prompt concern.

Approaches to exchange rate monitoring also vary. Some companies rely primarily on scheduled updates, while others monitor specific markets more closely or assess changes when currency movements exceed internal thresholds. 

There is no single approach that fits every organization. What stands out is the balance mobility teams are managing between program stability and responsiveness to economic change.

We share additional benchmark data in the Long Term Assignment Survey Highlights. The full survey provides deeper benchmarking insights for teams reviewing any aspect of their long term assignments. Contact us for more details on the full survey.

Currency Outlook

Looking ahead, commodity-linked currencies may remain supported if global resource prices stay elevated. Countries with strong export sectors and stable monetary policy frameworks, such as Norway and Australia, could continue to benefit from favorable market conditions.

At the same time, geopolitical tensions, including the ongoing conflict in the Middle East, are contributing to volatility in energy markets and broader investor sentiment.

Currencies in economies facing structural inflation, sanctions, or fiscal instability are likely to remain under pressure.