Kwacha remains firm

The Reserve Bank of Malawi (RBM) along with some economic commentators have said the slight depreciation of the local unit recorded in the previous month is no cause for alarm but rather a normal market occurrence.

The central bank and the economic commentators were reacting to a recent situation where the kwacha has remained firm to major trading currencies for the past 14 months, but experienced a slight depreciation last month by shedding off K1.

While Malawi normally experiences significant seasonal volatility in its foreign exchange inflows with earnings from the key tobacco export crop concentrated during the April to August period, the case was different in the just ended year where the local unit has remained stable throughout the year.

According to a recent RBM monthly average exchange rates report, the kwacha at stood steadily at K733 for the past months lost a kwacha to stand at K734 in March.

RBM spokesperson Mbane Ngwira said the move is merely some bumps along the way.

RBM governor Dalitso Kabambe, in the first Monetary Policy Committee (MPC) statement released end last month noted that the foreign exchange market has remained broadly stable for more than a year, supported by high levels of both official and private sector foreign exchange reserves.

“The expected inflows of foreign currency connected with the start of the agriculture marketing season will foster a further build-up of the international reserves.  As such, international reserves will be maintained at a minimum of three months of import cover, thereby maintaining confidence in the foreign exchange market,” he said.