Kwacha depreciates by 0.2% in March
The country’s local unit, the kwacha which has remained relatively stable between January and February, depreciated by 0.16 percent in March, according to a report by Blantyre-based investment and advisory firm Nico Asset Managers.
Yesterday, the kwacha was trading at K732.51 against the dollar from K731.13 on Monday.
In its March Economic Report, the firm says the dip is short-term and anticipates the kwacha to start appreciating following the opening of the 2017 tobacco marketing season on Tuesday.
Reads the report in part: “This overall trend towards depreciation in the value of the kwacha reflects uncertainties regarding Malawi’s macroeconomic outlook and has also been driven by the general strengthening in the value of the US [United States] dollar”.
Recently, the Reserve Bank of Malawi Governor Charles Chuka said that there was more room for the kwacha stabilisation following fiscal and monitory policy currently being implemented.
He reiterated that the central bank had taken “a second look” at the instruments used to manage the kwacha, thereby intensifying money market operations.
In an earlier interview, Head of Economics Department at the Catholic University, Gilbert Kachamba, said stability of the unit emanates from improved policies coupled with a significant drop in level of imports.
He recommended a control over appetite for imports as a long-term solution to the kwacha volatility and stable foreign currency reserves.
On interest rates, Nico Asset Managers says the interbank market are expected to be unstable as they depend on the volatility of liquidity while Treasury Bills (TBs) yield is expected to decline following the downward revision of the policy rate by the Reserve Bank of Malawi last month by two percentage points from 24 percent to 22 percent.
