RBM discussing modalities to formalise parallel forex market
Reserve Bank of Malawi (RBM) has said modalities on how best to bring black market foreign exchange dealers into the formal market are still under discussion.
The central bank and Financial Intelligence Unit (FIU) announced plans to formalise the black market forex dealers mid last year.
But speaking in an interview RBM spokesperson Mbane Ngwira said they are still discussing the feasibility of the process.
He said ideally, bringing the black market forex traders onto the formal market, will help the central bank know to some degree how much foreign exchange is coming into the country and how much is being spent and help enhance price discovery as there will be more players on the market.
Ngwira said the central bank is still reforming the foreign exchange market comprising among other variables, the foreign exchange controls.
“Formalising the black market forex traders will make them exposed to a lot of risks. For instance there are capital and tax issues.
“It is possible that as far as foreign transactions are concerned, there is nothing missing, but there could be an issue in regard to taxes; hence, we are striving to ensure that should we finally say they be formalised, all risks that they are likely to face are tamed,” he said.
FIU director general Atuweni Juwayeyi Agbermodji speaking in an earlier interview said though not allowed to operate, it has been established that black market forex dealers continue to operate and grow.
“Based on the National Risk Assessment results, we found that this sector is vulnerable, and because they are vulnerable we think they need to be regulated one way or the other because they are a sector that we cannot ignore.
“They are not allowed to operate but they are operating. In fact they are maybe doing better than established institutions and we have seen that just telling them not to do business is not working,” she said.
