Following a government crackdown on foreign exchange traders, the parallel market exchange rate has slightly declined. However, uncertainty persists over whether the trend will hold in the short to medium term.
A small and medium enterprise operator, speaking on condition of anonymity, stated that the telegraphic transfer rate in a WhatsApp group used for forex transactions had fallen from K250-K255 per rand to K185.
(S)he also told Business News that the dollar had depreciated by approximately 20 percent, from K5 000 last week to K4 000 this week, in a group used by informal traders to purchase vehicles from abroad.
Another forex trader, who also requested for anonymity, said the market remained too volatile to determine whether the price decline was sustainable.
“Parallel forex traders remain cautious, but our information suggests that commercial banks have no available forex. We will have a clearer picture on Tuesday when trading resumes,” he said.
Recent developments in the informal market appear to support Reserve Bank of Malawi (RBM) Governor McDonald Mafuta-Mwale’s assertion that the formal market rate is speculative rather than reflective of real market forces.
In an interview with Zodiak Broadcasting Station last week, he maintained that the official exchange rate of K1 750 per dollar more accurately reflects the currency’s real value.
Scotland-based Malawian economist Velli Nyirongo noted that recent forex movements are likely attributable to regulatory interventions, specifically crackdowns on illicit foreign exchange trading, which have disrupted speculative positions.
However, despite the decline in the official exchange rate, central bank data indicates that the country’s forex reserves have not substantially improved.
As of December 2024, total forex reserves stood at $530.9 million—equivalent to 2.1 months of import cover—showing only a marginal increase from $516.9 million recorded the previous month. The reserves, however, remain lower than the $669.4 million (2.7 months of imports) reported in December 2023.
