Malawi Kwacha depreciation ‘worrying’: Don’t panic, says Reserve Bank governor

Malawi currency the Kwacha continue to face a slide against the major world currencies with opposition parties saying its worrying development  but the Reserve Bank of Malawi (RBM) Governor, Charles Chuka, said there is no need for panic.

Chuka: No news that Kwacha is depreciating

Chuka: No news that Kwacha is depreciatingWa

Spokesman for finance in opposition Malawi Congress Party (MCP), Joseph Njobvuyalema said depreciation of the kwacha or weakening in the value of the local currency is “worrying.”

He said Malawi  being a highly import-dependent economy, every time the kwacha loses this amount of value, the cost of goods and services goes up significantly and almost immediately.

“It is worrying because it may only be a matter of time before we see increases in prices of goods,” said Njobvuyalema.

He also said the country expects to  have rise in the rate of inflation.

But central bank governor downplayed the weakening of Kwacha, saying  “it should not be news that kwacha is depreciating.”

Chuka attributed to depreciation of Kwacha to a high growth in imports relative to exports .

“There is no news that the kwacha is depreciating because we were expecting it anyway. [It is] because the country still has not managed to diversify its sources of exports,” said Chuka in an interview published in The Nation newspaper on Thursday October 16, 2014.

“And stories about donor flows remain negative at this point and there is no good news as yet.”

He said despite the fact that donors stopped bankrolling Malawi’s recurrent budget, the country is not stuck.

“It is growing and it is requiring more and more imports. The imports are necessary to grow in fact. Hopefully, at the new exchange rate, we have more raw materials and intermediate goods, basically inputs in industry.

“We hope data will show that in fact our imports have shifted in the sense that we are importing more of industrial inputs. So, as the economy grows, demand [for dollars] also grows,” explained Chuka.

The Governor said Malawi’s problem is that the nation has not yet reached a point where it is producing more exports.

“We need a bit of time to start producing more exports. So, interest rates remain so high and until we have stabilised the economy and interest rates come down, diversification of exports will still be a problem. So, we have more demand for forex than we have supply.”

The  weakening of Kwacha is happening soon after the country has just closed its marketing season for tobacco, touted as the main driver of the strength of the kwacha as the crop dominates the foreign exchange revenue buffer for Malawi.

Follow and Subscribe Nyasa TV :

Please share this Article if you like Email This Post Email This Post

More From Nyasatimes

More From the World

23 thoughts on “Malawi Kwacha depreciation ‘worrying’: Don’t panic, says Reserve Bank governor”

  1. Medrian Kaunda says:

    As I recall, 20 years ago the government of the day published the finding that Malawi had to diversify its exports away from tobacco alone, in order to be better able to export and obtain foreign exchange. The same was seen 10 years ago, and now we see the same statement once more, meanwhile NOTHING has really happened.
    As I recall, 20 years ago the government lamented that there were too many teenage pregnancies, and too many young girls (children, really) dropping out of school and being married at a too young age. The same laments came 10 years ago. And I now saw exactly the same being commented by the government a few days ago, NOTHING has been done.
    MPs, ministers, heads of important institutions for checks and balances, it is all rotten to the core. God save Malawi.

  2. wangawanga says:

    Mr chuka is a bad economist .he study markert economic which means he thinks like a vendor
    Buying and selling .however those type of trade does not help ordinerly Malawian
    Let him go he has let our country down with his poor head thinking

  3. Love your neighbour as yourself!! says:

    Its ridiculous Mr Chuka to Chuka to tell somebody in problems a mere “Don’t panic”!! Anthu ali pamavuto mma townmu bambo!! Inu mukuona ngati umbavawu chikuchititsa ndi chani??

  4. Wamandasi says:

    Amai Che Joyce depriciate Mk by a whooping 60% to get award and be called most influential woman. In process white people benefit from our stupidity. Azungu will give loan, get interest and demand depreciation. Anthu oipa mtima. Ine munthu okondweletsa azungu on his/her espense amandinyasa

  5. Amalawi sinditha kumvesa kuti vuto lathu ndi chani anthu tili ndi zithu zabwino kwambiri kuposa mayiko ambiri eg mtedza, nyemba, rice ,cotton timakanika kumapanga export bwanji?

  6. khamani!! says:

    Kuphwanya chizungu a governor … He is not making sense. Import surge does not necessarily imply growth .. it can also imply a depleting local production base … Malawians deserve better. Not everyone in a jacket and tie is a professional.

    1. Love your neighbour as yourself!! says:

      Usavutike aise!! DPP positions are given based on relationship and party membership not any qualification!!

  7. John Thomas says:

    I know i will not be popular, but i would say stop wasting forex on importing those Japanese second hand cars and give priority to value adding imports (Raw materials). The tax authorities would lose out in the short term, but the economy as a whole would benefit in the medium to long term as the export base expands.

  8. SAMSON says:

    Mr. Chuka is not a comfortable man and he is suffering from a guilty conscience . He knows he lied to the nation and he has no idea how to hold the currency strong. When he devalued and floated the Kwacha some 2 hand half years ago he clearly stated and promised that the devaluation and the floatation of the currency shall bring good results for the economy and that life shall be alright after a few months. He was supported by the Bankers Association of Malawi and some of those representatives from the international agencies with offices in the capital city including the world Bank, EU and AU representatives. He took a leading role together with other Bank CEO’s in devaluing the Kwacha and was so adamant that everything will be fine within a year. Up to today almost three years nothing really works other than marginal benefits in the availability of forex on the market.

    The down side is enormously painful to the ordinary man, with high inflation and abnormal interests rates spearheading the destruction of savings that some good Malawian citizen’s had toiled to get in the past years. The Governor and his bank CEO’s together with the rest of the Chanco economists have no clue on how to stabilize the currency and contain the economic fundamentals of our country. All they know is DEVALUE and MOP as the only GOD SENT economic solution for Malawi, nothing else.

    Because Mr Chuka and his friends including the WB, AU and EU representatives are observing that life is hard for the ordinary person because they lied to the nation, today they are very silent or are finding something else to blame for the economic deterioration. Mr Chuka’s statements in this interview are a reflection of a troubled man with a guilty consciousness.

    One by one each of those WB, AU and EU representatives who were on top of their voice calling for the devaluations and promising huge economic good as a result to the people of Malawi are quietly leaving the country with nothing to show for their time in Malawi, other than increased poverty levels they contributed. They could not have done it any better if it was not for the huge help they get from the Chanco DEVALUE and MOP Economists who have failed to develop the country and instead plundered it massively as cashgaters

    1. A currency cannot be fixed. Many countries have tried: Soviet Russia, Zimbabwe, Thailand etc they all failed. At least keeping a currency artificially weak; but trying to keep it artificially strong is an even more exceptionally idiotic idea …especially if you’re in the top 10 weakest economies of the world (which we are).

      A currency is only valuable if someone else wants to buy it (ie they want to buy goods denominated in that currency). In Malawi’s case, we don’t really offer the world much in terms of goods/services the world wants…yet each year we want more of what the world produces (iPhones, fancy cars, fashionable clothes etc) …the end result? A perpetually weakening currency.

      Therefore, I suggest you go out there and get a ‘proper’ job that helps the economy generate goods/services the world wants or reduces our dependence on foreign goods. That would be far more preferable than the intellectually-bankrupt conspiracy psycho-babble you’re peddling here.

      The Baptist has spoken.

  9. chikondi says:

    Create a better business environment. MRA is a nightmare, importing raw materials is way expensive, any decent business gets greedy officials sniffing around for ‘help’. How about low interest business start up loans, free production and finance classes, tax breaks until companies reach a set income level. Sorry, I forgot. To complicated bwana.

  10. Wampwesa says:

    Kwacha appreciates during tobacco sales only there after it depreciates again

  11. vin mongu says:

    yes it is true that it was expected but what puzzles me is that why do not we do something about it for 50 years? this is a failed state really.

  12. M'Malawi Weniweni says:

    Arguing that depreciation of Kwacha ins not news is like saying death is not news because we all know and expect to die one day.

  13. Hori says:

    We deserve the situation

  14. musovenge says:

    musova guys boma samasinthana ngati malaya

  15. VYOTO says:

    MMESA ALOMWEWA TISANAZOTE MU MAY 2014 ANKATI “PROFESSOR” ABWEZELESA MPHANVU YA KWACHA MOMWE ZINALILI NTHAWI YA BINGU. NANGA BWANJI ASANDUKANSO NGATI WA MANDAZI!!!!!! ZINALI ZAWUMBULI ETI!!!!!

    WELL , APART FROM THE POINTS THAT THE RBM GOVERNOR HAS SAID,PART OF OUR LITTLE GENERATED FOREX GOES TOWARDS EITHER UNDESERVING IMPORTED GOODS OR GOODS THAT MALAWI SHOULD HAVE BEEN LOCALLY PRODUCING BY NOW 50 YEARS AFTER INDEPENDENCE. FOR INSTANCE, (1) TOOTH PICKS ARE STILL BEING IMPORTED WHEN WE HAVE A LOT OF TREES(2) SOME FOOD STAFF LIKE JUICES,CHICKEN,SAUSAGES AMONGST OTHERS.THERE IS NEED FOR MORE ACTION ON THE GROUND TO EMPOWER MALAWIAN ENTREPRENEURS TO MAKE MALAWI MORE OF A PREDOMINANTLY EXPORTING COUNTRY THAN AN IMPORTING ONE.

  16. GONANI says:

    This is no sense, we can not always go back and forth like this. We need to create a stable economy which will constantly go forward – an economy that will not be shaken by change of season. What does this mean? It means we all must have one objective – thus building Malawi with zero corruption, zero thuggery, hard work with integrity.

  17. Omama says:

    Why not news yet you are mentioning about it. Tchuka, osabisa apa. Palibe depreciation imene inabweretsako zabwino pa Malawi pano. Its worrying. Njobvu is very very right.
    R U a politician who says no yet things are happening and just becoz some people have put them on wall????
    Shame. ITS WORRYING to hear that depreciation it is not news.

  18. Barnet says:

    It’s exactly what we expected, nothing is going to come out of this uncle

  19. John says:

    Let us just go at check at Ndata first before we start panicking, i mean before we know it, may be the big brother is also hiding some dollars in suitcases there. Chill guys, APM got this!!!

  20. Mbanangwa says:

    It was a foreseen circumstance. After tobacco sales which is our big forex earner, hat next!,!!!!.? We are in for trouble again, fuel will hike any day.

Comments are closed.