Goodall says Malawi Kwacha to stabilise 

Malawi’s kwacha is expected to stabilise in the next few days after it broke through a series of record lows against the dollar, Minister of Finance, Economic Planning and Development Goodall Gondwe has  said.

Goodall: Malawi Kwacha has reached a point of equilibrium

Goodall: Malawi Kwacha has reached a point of equilibrium

The minister said this on Friday in Lilongwe during the presentation of the Mid Year Budget Review Statement in Parliament.

“It is, therefore, expected that the [kwacha exchange] rate should stabilise soon and those speculations that are perpetuating the depreciation should take note of this,” he said.

Gondwe said the exchange rate policy that adopted a free floating exchange rate in 2012, at the behest of the IMF, meant that thereafter the exchange rate would be left to the market forces to determine its level.

“It was known at the time that a diminishing foreign exchange supply against a persistent high demand for forex would lead to a continued depreciation of the Kwacha until a point of equilibrium is reached,” said Gondwe.

Gondwe said the consequence of a loss of foreign exchange subsequent to donor withdrawal of budget support and dwindling   of tobacco export earnings has been a continuation depreciating of exchange rate between May, 2012 and May, 2014 the rate depreciated by 215% from K165 to K520 per US$ and between June, 2015 and 52% between June 2015 and December, 2015.

“The government feels that the point of equilibrium has been reached already, and has also implied by the Reserve Bank in its statement on the exchange rate recently,” he said.

In economics, equilibrium is a state in which forces such as supply and demand are balanced, and in the absence of external influences, the value of economic variables.

This then means, Kwacha value will not change.

But Gondwe said it is “expected” that the rate should “stabilise soon”.

He told the House that government had an intervening period of currency stability between October 2014 and June 2015 when the policy measures that the Reserve Bank took and the currency swaps that it involved the purchasing of government debt denominated in kwacha by the PTA Bank using dollars, briefly restored order in the foreign exchange market and the exchange rate steadily appreciated to K450 per dollar.

“The swap transaction also helped to increase official foreign exchange reserves to more than US$620 million, the highest ever reached since independence. However, the market forces emerged yet again to subject the rate to an almost depreciation,” said Gonwe.

The Finance Minister said government is determined that the macroeconomic stability must be achieved, in particular, that interest  rates should be low for Malawi to resume economic growth rate and achieve food sufficiency.

The kwacha is trading at K765 to a dollar.

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16 thoughts on “Goodall says Malawi Kwacha to stabilise ”

  1. Prince Goodman says:

    Goodal akutinamiza n’cholinga chot mbewu zgulidwe mosika mtengo.Fuck peter,fuck goodall and fuck DPP!

  2. 2016 welcome says:

    Uku ndiye kupempha mnyozotu! Gulumati! Tamuoneni nkhope eti!. It’s either you are an idiot or you think we are to take your hogwash seriously

  3. Mike Nyemba says:

    The fluctuation of the Kwacha and its associated impact on people’s life demonstrates that the market is unfair, does not have a human face, it is greedy, exploitative and of little use when common sense is excluded. The market is unsuitable and inappropriate where poverty is the order of the day. This is my theory about the market based on practice.

  4. farmer says:

    kwacha akhale momwemu end buy our tobacco 3 dollars and above. osati zachamba zomwe mukunenazo

  5. wautali muyao says:

    Why it didn’t be stabled all past months now its time for fodya u are talking nonces.fuck minister and ur government rubish…..

  6. NYAMALIKITI says:

    OH WOW GOODAL THATS GOOD NEWS…DHAAAAAA.!!!!! R U TRYING TO BE A PROPHET….DONT WE ALL KNOW KUTI FODYA WAYANDIKILA……ITS LIKE SAYING NOVEMBER AND DECEMBER KUYAMBA KUGWA NVULA……SHAME ON U..

    DONT WE ALL KNOW KUTI BETWEEN MARCH – JUNE KWACHA STABLELISES……POLITICIANS

  7. Funzo says:

    I’m sure I read this a few months ago!

  8. kwacha says:

    ZOWONA CHIFUKWA CHA FODYA IN MARCH CHACH WILL STABILISE. HELLO.

  9. Malikeni says:

    This old man should for once spare us from his outdated rethoric of the stabilization of the Kwacha. How many times has he fed Malawians with his financial prophecy. It is better to keep quiet or shut up, otherwise you will be ‘impeached’. It is high time you rested your tired thoughts and stories.

  10. The Analyst says:

    O………………………………………………………………………………………………………………………………………………………………………………………………………….O
    “Promise little an do much.” – Hebrew Proverb

    Good-All has enough and for long said “the Kwacha will stablise.” What people want to hear now is “when”. Komanso nobody wants to hear anything from anybody, but see (the Kwacha stabilising) with their own eyes. Coz as untrustworthy as you govt officials are, people now believe theIr eyes more than their ears.
    ……………………………………………………………………………………………………………………………………………………………………………………………………………….
    . . . Now that the tobacco farmer is about to sale his/her leaf in Dollars but receive Kwacha; you want to appreciate the Kwacha so that the farmer can go home with as little Kwacha as possible, sichom’cho? And this you call economy – supply and demand? Kulakwatu uku!

    . . . What is an economy, if not a network of people who are stealing from each other?
    A bank steals from borrowers (companies and people); people steal from their employers (companies); vendors steal from the buyer. The govt steals from everybody (in the name of tax). This is called economy.
    …………………………………………………………………………………………………………………………………………………………………………………………………………….
    Let our tobacco be sold to foreigners, in Kwacha. This means the buyer will come with forex and buy the Kwacha to buy the tobacco. This will smoothen out the kwacha depreciation/appreciation (since the buyer of Kwacha will smoothen out their demand for Kwacha to hedge against swings) and thus significantly reduce and stabilise inflations.

    Otherwise, Malawi is doomed!
    O……………………………………………………………………………………………………………………………………………………………………………………………………………O

  11. Kaziulika Chimugonda says:

    I have never requested resignation of Godall Gondwe since Malawians started singing this song. Now I join Malawians in asking Godall Gondwe to resign. Gondwe as minister finance and economist by profession is not ashamed of what has happened to Malawi economy and depreciation of the MK in the last two years. Gondwe has like Mutharika has never addressed Malawians on economy melt-down. Shame!

  12. Jelbin mk says:

    But this fool does not tell is that the MSB sale also hugely affected our economy coz was sold for a song trying to help Mulli go scort free and they forgot that they were digging their own mupumulo wa mbava(grave) for the DPP led administration. The gap left by that move will take too long to be filled up bcoz we don’t even know what happened to the money realised from msb sales.

  13. Kadakwiza says:

    You can’t build a house without materials and you can’t have materials without money. Mr Finance minister who is an economic professor knows very well that there is nothing he can do because our government have no money. It will be a miracle for Hon. Finance minister Gondwe to build our economy without money. Our country can’t even manufacture a spoon, all a screw. Most of our commodities are imported from outside Malawi. It is very difficult for our country to survive. For now the DPP government and it’s leadership should just go to Mr. Donor and kneel down ask for aid. We need 40% budget support. Our President and his government should just swallow their pride and go to Mr Donor’s doorstep and beg for budget support. Malawi is very poor and can not be economic independent this time around. Our president should stop fooling himself when he said he will start going to the East. Us Malawians we say he must start going back to the West and allow the thoroughly investigation of the famous K577 Billion cash gate. In so doing donors will start trusting his administration. If not, Malawians will continue suffering.

  14. Elias says:

    Reserve Bank Governor should be expelled, failing that The President is losing morale because the Governor is useless and he is killing the president political stamina.

  15. Elias says:

    Koma choti mudziwe anthu mabizinesi adaima anthu akaoda business siikuwina ending up anthu alibe chochita unemployment rate is increasing chifukwa kwacha mwaisungula kwambiri, chitanipo Kathu even ma revenue a msonkho atsika zedi kamba ka policy mutsatayo

  16. tulo amalawi says:

    akuteta enough of u go to hell and why is god delaying ur departure

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