The Malawi Kwacha held on to gains against the US Dollar due to the inflows from the tobacco trade – Malawi’s main foreign exchange earner accounting for more than half of all foreign exchange earnings.
According to Reserve Bank of Malawi (RBM), currency has gained about K27 from selling at K449 to the dollar to K422 on April 2.
Kwacha’s hold on to gains has been attributed to the start of the tobacco marketing season last week.
The tobacco marketing season resumed with Lilongwe Auction Floors opening on Monday March 24, followed by Chinkhoma on March 25, and Limbe on March 26. Mzuzu is going to open later.
A market update compiled by the Tobacco Control Commission (TCC) indicates that during the first week of trading Malawi has realised about $5.9 million (about K2.4 billion) about 92 percent higher than $3.1 million (about K1.1 billion) realised in the first week last year.
During the week about 5.1 million kilogrammes of burley tobacco were sold against 2.4 million kilogrammes sold during the same period last year, which represents a 112 percent jump.
Proceeds from tobacco have started boosting the country’s foreign currency reserves which may continue anchoring the kwacha and also help the private sector to procure fuel and raw materials for production purposes, according to the central bank.
The import cover, the determinant of the country’s ability to import goods and services in a specified period, is now to the internationally recommended minimum of three months [$564 million].