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).

Malawi Kwacah continues to weaken

Malawi Kwacah continues to weaken

Kwacha slides further

Kwacha slides further

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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47 thoughts on “Kwacha extends slide against Dollar: Malawi currency is world’s worst performer – Bloomberg”

  1. KAYA says:

    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

  2. honey comb Chidyauzu says:

    Peter Mutharika has failed. He should resign otherwise Malawi will go back like when it was with his arrogant brother.

  3. Yamikani Sekani says:

    When shall Kwacha gain its power?

  4. Long Dick says:

    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!

  5. 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.

  6. commenter says:

    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 he had a vision for Malawi osati izi!!

  7. chimwemwe says:

    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 in this environment low interest rates is putting more pressure on kwacha to devalue, increase interest rates to around 30% demand for forex will drop and once kwacha stablises start reducing interest rates, if these principles were acted on time we would not have had such a steep fall. Dzuka RBM and Goodall before its too late and people lose faith in our cuurency.

  8. Mboga syangu says:

    Kutalika kwatyochere asogoleri wakwagolitati…

  9. woooooo! says:

    Iwe pitala zaumathanyula zakozo ukagwere nazo uko dziko lakukanika kuyendetsa tula pansi tisanakumatche.

  10. adawaza says:

    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

  11. Tengupenya says:

    the fact it whatever the government did last year only delayed the sliding of the kwacha. it was going to happen anyway. and this will continue. the kwacha is a symbolic currency. everything s costed in dollars in Malawi. so whatever one does, you will pay for services and goods in dollar equivalents. just get rid of the symbolic currency and use the one in which the cost of goods and services are actually calculated. alternatively convert all your kwacha earning to dollars as soon as you earn your kwacha.

    why is the government afraid of implementing a regime of multiple currency as legal tender. Try it for one year: free the ZAR, the USD, the BPS and the EURO and make them all legal tender in Malawi. You will be amazed how much forex will prevail on the market. The kwacha is dead symbolic money.

  12. ANGITAU says:

    Maoko winu wa DADA Gondwe for the bad job well done to pl
    ay with malawian lives.Lets wait for next year as you say.God bless malawi.

  13. Nathan says:

    Mwawonatu, kukhala Purofesa wa Malamulo sikudziwa kuyendetsa Boma! Pitala ndi mphunzitsi, osati mtsogoleri. M’mene akuwonekela Pitalamu angakhale ndi nzeru zoyendetsera Boma. Anthunu, kungomva kuti munthu ndi Purofesa, basi mukuti ameneyu ndiye akhale mtsogoleri! Utsogoleri ndi mphatso yopatsidwa ndi Mulungu, utsogolesi sachita kuwerenga mabuku ndi kulemba mayeso. Munthu ukakhoza mayeso a Malamulo sikuti ndiwe wodziwa Malamulo, koma wodziwa Mayeso womwe wapatsidwawo. Ngakhale mbuli ngati Pitala zimatha kukhoza Mayeso. Tinkanena anathera mu siizi. Purofesa akulephera kuyendesa Boma!

  14. Ndoda yabwandila says:

    Koma pa Malawi pokha. Kaya
    mdabadwinji kuno. Atsogoleri
    athu amaona zinthu mozondoka
    nthawi zonse poti ifeyo tili
    mtulo la mkafe.

  15. mzungu wa nzeru says:

    Do you think politicians without our hard work are a solution to our financialwoes.Let work up.

  16. ndawagwira says:

    I dont know

  17. botomani says:

    Happening under the stewerdship of our learned mbofyo mbofyo economist and prof. Of doom.

  18. Sapitwa says:

    The Rand has weakened, the Pula has weakened, the Zambia Kwacha has weakened,the Kenya Shilling has weakened and in all these countries,they don’t blame anyone for any wrong doing. Whe mojor countries say in the BRICS are economically affected, then the small economies follow suit. The Malawi Kwacha can not survive either and expect more to no one’s blame. Better buy Malawian and produce more Malawi goods instead of buying eggs,water,soap, cooking oil from South Africa as if Malawi does not produce these.

  19. Dwambazi says:

    Still waiting to clap hands!

  20. Paulos Banda says:

    People are buying dollars in Malawi and sell in neighbouring country Zambia @ZK10 which is MK650/dollar. And this will definetely going to make dollar scarce at Malawi market.

    Goodall ikhwefuleni kwacha kwambiri kuti anthu asiye kumagula little we have in Malawi and resell it in Zambia.

    Mwamva? Koma paja boma la DPP silimva.

  21. Bambo a Temaco says:

    Ndiye mavuto kumuzi choncho tibwere msanga?

  22. macwell Nambuya says:

    What did we expect from an administration full of crooks. By the time we get to the next elections malawi economy will be finished, and yet malawians will still vote for these people. Dont you think Malawi deserves this?

  23. angoni apaphata says:

    Eh… KOma ziliko ku MAlawi

  24. Maliroagonepati says:

    So the PTA debt “trick” that Goodall Gondwe pulled last year has come back to bite us in the ass? What will all those DPP idiots who were praising Goodall say now? You don’t prop up your currency by tricks; you prop it up by good governance, production, exports, and prudent expenditure.

    There’s one thing that can reverse this trend – bring back donor confidence by going after ALL cashgaters and tightening controls on public finances. However, since APM and his DPP are hell bent on selective pursuit of cashgate cases (JB and PP cases only) and are only paying lip service to improving controls over public revenue, there is no hope of the donors coming back as long as there is this administration. In truth I don’t think APM and his DPP care that much – as long as they can keep cashgating the tax revenue, they’ll be very happy…

  25. Zanga Phe Basi says:

    Sobl Goodal tell us are these the hand claps u meant in very recent comment u made?

    Kukhala kukuta mano bcoz this is happening while tobbaco sales are underway! What is gonna transpire when sales stop?

    Amalawi anzanga tiyene nazoni ndi zomwe tinavotera pa 20/05/14 let us not put blames on others it is our making.

  26. Kasim says:

    Maya ZANU izo akuvutika kwambiri ndi alomwe ndi umbuli wao sorry continue voting for these clueless leaders. Simunati muziona nthochi zikugwidwa ndi matenda mupulumikira pati alomwe

  27. shaft ya mbava says:

    Ife za mayendedwe akwachazi aaa tinasiya kuzitsata…..ife komakuchinda basi…..zakwachazo azipanga a peter omwewo nda zinzawo nanga sanasiya kuchinda…..nthawi ali nayo…..ife chabwino tizisawuka iwowo azilemera..mixx

  28. hisbolla says:

    Malawians we have huge appetite for forex which we don’t PRODUCE. EVERYBODY NOW IS BUYING A CAR OR CARS. MUGABE STOPPED SUCH LUXURY FOR SOMETIME TILL THINGS IMPROVED. WE CAN BORROW A LEAF

  29. i miss kamuzu says:

    toilet paper currency. muzifuna ndalama za uranium mumadya nokha zija. nyo!

  30. solomon says:

    i dont realy know why people are worried with a weak kwacha. i weak currency makes our exported goods cheap hence if we can concentrate in production our product will be cheap and outside country will floke to our products hence growing the economy. strong currency is bad than weak one thats why china always devalue

  31. chithope says:

    Koma mabvuto akuladi tigulaso shuga 800k amalawi takula tatha paja maboma akuthyolo ndi mmene amapangira chosecho tili mu zero deficit kaya amwai ndi alomwe

  32. Alungwana says:

    The worst government of failures.

  33. Masoambeta says:

    Good news. Tigula malo motchipa.

  34. The real ujeni says:

    Peter Mutharika called Joyce Banda unpalatable names and that the country’s economy was in a mess. He comes in he completely messes up an economy which was growing under JB. Who is clueless now?

  35. point Blank says:

    Badall and his tricks.

  36. JJB says:

    That’s all we can sell, Tobacco.

    The weak Kwacha does not favour imports, by the same token it should favour exports.

    The problem is not the Kwacha, the problem is a lack of backing by its lazy citizens who expect everything to be blamed on Government.

    There is always talk about creating an atmosphere, is this not one of the atmospheres? How can the Kwacha gain power when all we do is demand other peoples currencies.

    No one is demanding the Kwacha because we have nothing to sell, our children go to Zambia,Zimbabwe,South Africa, UK,USA for education, no one sends their children here. We buy even Maize. And we expect the Kwacha to gain power.

    Zautsilu basi.

  37. Prison Warden says:

    ingondipatsani ndikasetere zimenezo

  38. abdul al barghdadi says:

    professor president,,,,ha ha ha,,,plus impending,,looming hunger,,,you gonna die as your brother,mark my words.

  39. koma says:

    Mbuzi ya president ija mumati kwacha izitani?

  40. mulangizi wa APM pa mthibulo says:

    Kwacha’s performance is synonymous to sitting President’s performance. In 1992, £1 was equal to K5 under MCP.

    Under Muluzi it wasn’t too bad. The big Kahuna managed to stabilise it in his first term.

    Koma nthawi ya Bwampini uyu eish! Chongofunika kuchithamangitsa chimenechi.

  41. jimbo says:

    Clearly the government needs to comment on the situation. This is a very serious issue and the people need to know how the government plans to halt the slide of the kwacha. Remaining silent is not an option. Something has gone drastically wrong with the management of the countries finances. This is on a scale as bad or worse than cashgate. The opposition parties should be pressing the government for a statement. Goodall Gondwe must come forth and explain what is happening and what solutions are being put forward.

  42. Chingogo... says:

    But the Kwacha has fallen because of greed by the banks to profit from speculation. Why don’t you as journalists research first and try and understand the cause. Such reporting causes panic and that is the reason we are not developing. How much have you gotten from the said standard bank to report this rubbish? Have the Standard Bank guys also told you that since government gave them a directive that they can only change the rate if they have deals in excess of USD750,000 they have not changed the rate because there is not that high demand for forex on the market? why was the rate falling then if there was no demand? The rate can not fall for a further 25% or whatever they call it because the reserves are enough to cover such fluctuation. And someone blames the government for borrowing to cushion the rate? With such greed by the banks where would we be by now? K900 for dollar? and what would the USD300m from the tobacco do? Blame people who are not patriotic and don’t think about anyone else but themselves (the banks) and not the government and do some proper research before writing bullshit here.

  43. Bololo says:

    Everyone indeed wants to be an analyst. Kafunda surely doesn’t know what is happening in this country. For starters I would say the PTA Bank deal has cushioned us a bit. RBM would be hesitant to sale fx to the banks had the reserves been as low as before this deal in case you don’t know Chuka. The PTA loan repayment has nothing negative to do with the exchange rate and if we didn’t capitalize on the positives then its our internal problem. In addition, all tobacco proceeds now go through the commercial banks. Meaning we have to blame the banks on how they are managing the forex they purchase. To me I wouldn’t blame them zavuta basi chaka chino, tobacco market has not performed well enough and contract farming has just made it worse. Talking of contract farming, the tobacco companies pre-finance the farming (i.e. give loans to farmers) and now they only release the forex when they buy on auction and the little extra they pay to contract farmers after they deduct the loaned amount. Hence, the portion of tobacco proceeds from contract farmers that went to tobacco companies as payment of loans they extended is accountable for the missing dollars. I agree we have economic problems but my point is the only way to understand them is to consult the analysts that take time to research and cross check their points than everyone on the streets parading as an analyst.

  44. Nyangwita says:

    Bwampini Muthalika, watikwana galu iwe.

  45. Charombanthu says:

    It is obvious and expected of the Kwacha to continue declining until we boost our export revenues and reduce the volume of imported goods (such as eggs, chickens, oranges, cars, name it!!!) which lead to trade deficits. Komanso, most people now are holding on to the Dollars in anticipation of further depreciation of the Kwacha thereby exerting more pressure on the local currency. The question is: When are we going to come out of this mess which keep recurring? The country/economy is indeed on auto-pilot looking at where we are heading to….

  46. Joseph says:

    Dont worry, we will clap hands for DPP come next year!

  47. lusungu says:

    All currencies in Africa have dramatically depreciated. this is a continental crisis now. zambia, tanzania, kenya, south africa, zimbabwe, uganda, nigeria, ghana are all crying as their respective currencies have heavily depreciated against the dollar, reaching record low levels

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