Kwacha extends slide against Dollar: Malawi currency is world’s worst performer – Bloomberg
Malawi currency, the Kwacha continues its constant fall against the U.S. dollar and other major currencies now trading at MK568, MK868 and MK42 to US Dollar, UK Pound Sterling and South African Rand respectively as quoted by National Bank of Malawi (NBM).
The depreciation of the Kwacha is hurting importers, students studying with international examination bodies hard as they use more Kwachas to get foreign currencies than planned.
Many people are failing to buy forex from banks, a development that could be a result of the dealer banks hoarding forex in-order to suppress supply and induce continued depreciation for their profit making.
There is panic and uncertainty following the Kwacha continued weakening.
The Kwacha may slump another 25 percent by December, according to Standard Bank Group Ltd.
A Bloomberg report on Tuesday indicated that Malawi kwacha is the world’s worst performer after the currencies of neighbouring Zambia and Kazakhstan this quarter, plunging 22 percent against the dollar.
““The situation is pretty dire because now’s the time the kwacha’s supposed to get a little bit stronger during the tobacco season,” said Hanns Spangenberg, a fixed-income analyst at NKC Independent Economists in Paarl, South Africa. “Malawi is in for a difficult fourth quarter.”
Reserve Bank of Malawi figures show that gross official reserves have dropped from $708.87 million or 3.39 months of import cover on August 14 2015 to $697.84 million or 3.34 months of import cover as of a fortnight ago.
On the other hand, private sector reserves also decline to $297.72 million or 1.42 months of import cover as of Friday last week from $312.64 million or 1.5 months of import cover on August 14 2015.
Centre For Social Concern (CFSC)’s Economic Governance and Justice Programme officer Mathias Kafunda has predicted tough time a head as prices of essential commodities will continue skyrocketing.
Kafunda attributed the Kwacha’s depreciation to the Malawi government move of selling debt to COMESA’s Preferential Trade Area (PTA) Bank in December, 2014 in order to increase the dollar base as the result the country was paying back the forex obtained from tobacco sale proceeds.
“It’s very unfortunate that the currency is sliding while tobacco proceeds are fetching highly. The problems lay on how such reserves are managed. We suspect that government isn’t honest enough to the public on how tobacco proceeds are managed.
“This has led to speculation that, the nation has started paying back debt gotten from PTA Bank end of last year (December, 2014) through the revenues collected from tobacco proceeds. The condition we are now could have been avoided if government listened to such move that would
hurt us hard.
“Nevertheless, government must come clearly to the people on the current economic turmoil and control the parallel market (BlackMarket) for forex which has been relaxed for some time now, otherwise the citizens will still feel the pitch of such economic huddles”, predicts Kafunda.
Analysts have been pressing the monetary authorities in recent weeks to consider pumping into the market a considerable amount of forex as one way of reducing pressure of demand for the foreign exchange and help slowdown the depreciation of the kwacha.
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WE voted for Peter Mutharika so that he can continue from where his brother stopped and so, what do you expect do you recall where Bingu Wamutharika left Malawi? if you do then imagine the continuation worse than that we are all paying the price of our choice no one to accuse
Peter Mutharika has failed. He should resign otherwise Malawi will go back like when it was with his arrogant brother.
When shall Kwacha gain its power?
Our Education system is also to blame a lot, why allowing too many foreign examining boards! Most are there to drain the little forex we get from tobacco! For example, most of ABE programmes can be administered by Malawi Institute of Management – paid in MALAWI KWACHA! I applaud ICAM for thinking BIGGER!
The advert on MBC goes like this: ”ECONOMIC BOOM WITHIN MONTHS” Who does MBC want to cheat??? Is MBC really a public broadcaster? What type of public broadcaster is MBC by continuing relaying lies to Malawians from DPP led government??? A warning to MBC is that surely one day these people will be sued. Do not take Malawians for granted. We are feeling the pinch of the economic mismanagement by the dpp.
This has always been happening once DPP is in power, nthawi zonse!! Then there will be maize, fuel and sugar shortage soon AND THEN paye tax will rise sooner.. Watch the DPP / Mulakho wa Lomwe, its what they do best to our economy. Can’t they see how well Zambia has done, plus Zambia is a beautiful country. Malawi’s economy will continue to fall because of the DPP administration and sheer lack of knowledge based on appointing people to work according to their tribe!! Malawi brace yourselves for tough times ahead, The best president Malawi had was Kamuzu Hastings Banda… Read more »
This kwacha fall has been overdone due to lack of knowledge and trial and error principles on the part of RBM and Goodall, 2 major blunders allowing exporters to retain 100% proceeds therefore creating shortage in the market, local farmers dont benefit it is Limbe leaf JTI, africal leaf and all foreigners benefitting so these foreign companies are hoarding forex and creating artificial shortage, so need to go back to 40% immediate conversion and 60% within 6 months, this will aloow constant forex in the market. The second blunder reducing interest rates, for business low interest rates are goods but… Read more »
Kutalika kwatyochere asogoleri wakwagolitati…
Iwe pitala zaumathanyula zakozo ukagwere nazo uko dziko lakukanika kuyendetsa tula pansi tisanakumatche.
Enafe tinkanena kuti mathanyulayo sangayendese dziko. He is a professor of doom even achicken believe that. Alomwe ndi mbuzi za anthu. 2019 chakwera BOMAaaaaaaaaaaa woyeeeeeee