The Reserve Bank of Malawi has confirmed that the country’s local currency, Kwacha which has been in free fall in recent months, was stabilizing against the US dollar with the Central Bank dealing rate closing at 3675 units Saturday while in some bureaux de change adjustments were being done while customers transacted.
The central bank said the local unit has appreciated against the dollar, British pound and South Africa rand as well as the euro.
The fragile stability of the kwacha forced some authorised dealer banks (ADBs) to alter downwards the rate at which they have been buying the kwacha from customers.
Foreign exchange rates in some authorised dealer banks show that the kwacha is trading between K710 and K719 to a dollar.
At FMB Kwacha is at K719.72 to a dollar, at Inde Bank it is K719.72 while at Golden Forex Bureau the rates are a Kwacha at K710 to a dollar.
The central bank has not provided an explanation behind the gain in the value of the kwacha.
Mbane Ngwira, the Reserve Bank spokesperson, said the Kwacha has been “stabilizing and appreciating”, saying it is expected the local currency will remain strong.
Economics professor at Chancellor College, Ben Kaluwa, told a local press that the Kwacha may trade as low as K620 or thereabout by next month to the greenback owing to various forces on the market.
He said Kwacha will strengthen with earnings from export commodities such as tobacco, the country’s main foreign-currency earner and low demand of the dollar after private traders and government imported farm inputs.
Chikavu Nyirenda, an economics lecturer at Catholic University, said the appreciation of the local currency was good for the national economy as it could result in stable prices and ease the inflation rate.
Malawi’s inflation rate stood at 24 percent, according to Malawi’s National Statistical Office.
Finance Minister Goodall Gondwe recently told parliament that the Kwacha exchange rate seems to have reached “the point of equilibrium” and that the local currency should start gaining stability.
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.
“The Malawi economy will be back on track,” confident Gondwe has said.Follow and Subscribe Nyasa TV :