Private sector foreign reserves rise 25 %
Private sector foreign exchange reserves, which include foreign currency denominated accounts (FCDA), and authorised dealer banks’ own position rose by 25 percent between August 14 and November 11 apparently defying the lean period.
The Reserve Bank of Malawi (RBM) data indicates that on August 14, private sector foreign exchange reserves stood at $283 million. But in defiance of the current foreign exchange lean period which is normally due after the end of the tobacco marketing season and when the country imports farm inputs, including fertilisers, the private sector reserves have risen by 25 percent to $354 million.
However, during the same period, official gross reserves have slumped from $478 million on August 14 to (2.5 months import cover) to 429 million (2.3 months imports) signalling the onset of the lean period.
The kwacha has also plummeted although official gross and private sector reserves have remained considerably high. The local unit has depreciated by over 20 percent from selling at K343 on August 14 to K416 per dollar on November 13.
Recently, while explaining the depreciation of the kwacha against high reserves, the Financial Market Dealers Association (Fimda) president Alfred Nhlema, noted that due to recent policy changes including the devaluation and floatation of the kwacha they have experienced challenges in terms of pricing especially forex and have developed and adopted a code of conduct for the dealers to arrest the situation.
