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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Prince Goodman
Guest
Prince Goodman
6 months 24 days ago

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

2016 welcome
Guest
2016 welcome
6 months 26 days ago

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

Mike Nyemba
Guest
6 months 27 days ago

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.

farmer
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farmer
6 months 27 days ago

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

wautali muyao
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wautali muyao
6 months 29 days ago

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

NYAMALIKITI
Guest
NYAMALIKITI
6 months 29 days ago

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

Funzo
Guest
Funzo
6 months 29 days ago

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

kwacha
Guest
kwacha
6 months 29 days ago

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

Malikeni
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Malikeni
6 months 29 days ago

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.

The Analyst
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The Analyst
6 months 30 days ago
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… Read more »
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