Malawi won’t fix weak Kwacha exchange rate– Finance Minister

Finance Minister Goodall Gondwe  has said the Peter Mutharika administration is not contemplating reverting to a managed exchange rate regime as a way of containing the continued depreciation of Malawi’s national currency. The kwacha is trading at about 520 to the dollar, down from 410 in September.

Gondwe: No f

Gondwe: We will slow depreciation

There have been widespread  speculation that it is now the government’s thinking that in the absence of substantial foreign exchange inflows from donors, the kwacha cannot be left to float so freely.

Other government economists observed that with reserves below one month of import cover and without any sign of improvement in the near future, the free floating currency is not sustainable for Malawi at the moment.

But Gondwe denied that the government is planning to revert to fixing the currency to the dollar, as was the case during the late President Bingu Mutharika’s administration.

The Finance Minister said the government is considering short- and long-term solutions to slow the depreciation.

“The short term is that we are looking for resources and we are about to get them to bring into the market to increase the demand for the Kwacha,” Gondwe said on Voice of America (VOA). “In the long term, Malawians will have to work hard, to diversify and produce more products to export. Everybody knows that.”

Gondwe said there was no need for Malawians to panic because “this is not the first time for the kwacha to fall.”

During much of 2012, Gondwe said, “there was much faster depreciation than we are experiencing now. Do not forget that. We started from 160 [kwachas to the dollar] to about 460. So this is not new for Malawians themselves.”

The kwacha has been unstable since 2012, when the administration of former President Joyce Banda floated the currency to let market forces determine its value.

It is more stable during tobacco marketing season, between March and September, when the country generates a lot of foreign exchange from tobacco sales.

Prominent Malawi economist Thomas Munthali told VOA he was troubled by the rate of decline, saying there was a strong chance of a “very high inflation level that would erode the purchasing power. And this would escalate into pressure of workers asking for higher wages.

“And at the same time,” he said, “the industry will be faced with tough times because the interest rates are likely to go up.”

Reserve Bank of Malawi Governor Charles Chuka is on record saying there is still a limit to which the Kwacha can depreciate.

He said while it is difficult to estimate that limit, it is definitely the amount of money to purchase hard currency that matters most.

“This is where the Reserve Bank of Malawi comes in – to balance the supply of money to economic activity and in so doing contain inflation and exchange rate stability,” said Chuka.

He noted, however, that such type of work is made extremely difficult when the government of the day is forced to print money.

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King Zude
Guest

God is very angry with these thieves,zinabela ma vote,kupha anthu ndiye kudya kwawo..tingodikira a malawi tilire kwambiri the God will have mercy on us and mapwiya will die..

BA
Guest

Eshiii Kaya Okuba Mavoti Aja Dpp+saulos. Amafunamo Chani M’bomamu. Kumbukilani Kuti Kwacha Izisintha Mu 2012 Ndinuyo Munangomusiila JB mavuto bas apanso mukutinamiza kut zinayamba 2012. muziona apa ndiye anthu ku statehouse azabwela atavula maliseche

2019
Guest

Reliable sources indicate that fuel will be scares from March 2015!

Andrew
Guest

Kwa inu Mayi wanga muli kunja ndilira. A DPP musatinamizenso apa, you were aware kuti ma donors asiya kuthandiza Malawi nanga bwanji munkayenda khomo ndi khomo kukopa anthu kuti akuvotereni kwinako mukutibela mavoti kuti mulowe m’boma. mwaononganso. Nyimbo mundi yimbireko ya Joseph Nkasa

Danford Thabang Nduta
Guest
Danford Thabang Nduta

Malawi wafika pamoto wa lawi lawi guys kaya titani eish

Medrian Kaunda
Guest

We need to …. So many commentators are saying that, and they are all COWARDS. Or, As if anyone is listening. Here, commenting, the contributors are apparently brave and critical, , expecting “somebody” to pick up on their alleged grievances. It is all so pathetic. Slot in the pray to god factor, and you got the Malawi spine spot on. Spineless. What you REALLY need is another 20th and 21th July, but stronger, otherwise just forget and go back to the village

Kassim
Guest

Kaya tidziwona

Sam
Guest

clueless, goodall, clueless chuka and clue less government, kwacha appreciates in tobbacco season so we farmers get less kwachas, when planting season we pay high prices for fertiliser and chemicals. Just resign Goodall you are too old

MMalawi
Guest
If I were government I would accelerate the implementation of some donor funded projects or eage non government organisations that have received donor money to do so, so that the forex is gained and avoid printing money or domestic borrowing. I will also encourage in the long term establishment of fertilizer manufacturing companies in Malawi or even reduce the fertilizer input subsidy as results show that many farmers have not graduated from it after over ten years and thus its unsustainable and most of it does not reach the intended target groups. I will also look at establishing legislation governing… Read more »
Alick banda
Guest

Ask the heaven power to give us more iplemendation

wpDiscuz

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