Forex rates stabilise after kwacha ‘floated’
Published data shows that the exchange rate between the kwacha and the dollar has not changed from the first week after the 44 percent devaluation of the local unit implemented on November 9 2023.
The dollar has been selling at an average K1666.67 at some commercial banks namely, National Bank of Malawi, CDH Investment Bank, Centenary Bank and FDH Bank plc. All the banks listed here were selling the local unit at a flat rate of K1 700, as announced by the central bank on November 8.
Reserve Bank of Malawi (RBM) spokesperson Mark Lungu said in an e-mailed response that the central bank is “satisfied with the stability” witnessed in the past two weeks and expects the local unit will fully stabilise in the long-term.
Reacting to the development, Malawi University of Science and Technology economics lecturer Bertha Bangara-Chikadza said the apparent stability is normal considering that some donors released forex into the markets after Malawi secured a $175 million Extended Credit Facility with the International Monetary Fund.
She, however, stressed that it was too early to conclude that the kwacha may remain stable because the country is not “exporting much” this quarter but is importing some critical imports such as fertiliser for the growing season, a development she says “still put pressure on the kwacha”.
To put it into context, RBM figures show that Malawi exported $111.9 million (about K125.8 billion at the prevailing exchange rate at the time) but imported $291.7 million worth of goods and services, representing a deficit of $179.8 million or 151 percent of the total exports.
In a separate interview, economic analyst Bond Mtembezeka agreed with Bangara-Chikadza that it is too early to make conclusions on the perceived stability of the kwacha.
He said in a WhatsApp response: “It’s too early to conclude as supply and demand imbalances still persist.”
RBM announced a new set of “operational controls” that permitted authorised dealer banks to “freely negotiate exchange rates to trade with their clients and amongst themselves
