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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38 thoughts on “Malawi won’t fix weak Kwacha exchange rate– Finance Minister”

  1. King Zude says:

    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..

  2. BA says:

    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

  3. 2019 says:

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

  4. Andrew says:

    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

  5. Danford Thabang Nduta says:

    Malawi wafika pamoto wa lawi lawi guys kaya titani eish

  6. Medrian Kaunda says:

    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

  7. Kassim says:

    Kaya tidziwona

  8. Sam says:

    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

  9. MMalawi says:

    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 how private partnerships between Malawians at home and those in diaspora can effectively work together on projects that can assist Malawi to create jobs and encourage entrepreneurship especially in value addition and products that have prospects for export.

  10. Alick banda says:

    Ask the heaven power to give us more iplemendation

  11. mr malawi says:

    we need to implement income resources like doko irrigation farming and minerals we will see Malawi on another level see eq giene

  12. galu wa galu says:

    This is the time to love your country. Critising will not help. Support the country. Do you remember Hule linja linachita float Kwacha?

  13. loveness says:

    TIME FOR MALAWIANS TO SUFFER !!!!

  14. Harawa says:

    PP depreciated kwacha by 500% while DPP only by 10% then you’re making noise anthu openga inu

  15. Medrian Kaunda says:

    Zimbabwe as role model, perhaps………….

  16. FARAO says:

    ZIKANAKHALA KWA AZUNGU STRAIGHT MMENE ZIKUYENDELAMU AKANATULA PANSI MA UDINDO YAWA KOM POTI NDI AKANGANYAWA BASI ALI KAKA KAKAAAAAAA !!!!!!

  17. You must know!!!!!! says:

    Kangi nayomwirone. Kisu kimalike nosi. Fyotwalonda ngimba twafyangha nosi. Akabwaliro nosi kafwene aka ndamyo. Kayoswe wanyimalawi tuli wan’yongafu. Isyani!!!!!!!!!!!

    Une ngulya ubwali bwangu teniteni/lisechi ni nguluwe. Tukwaghana kilabo mwe wakundwe mwesa

  18. You must know!!!!!! says:

    Tizikatapa Madolas
    kunyumba kwa APM. Zija anasunga in 2012 zatha panopa?

  19. Losambo says:

    This is just kalambula bwalo, film sinayambe. The beginning of the beginning

  20. Addam says:

    Musova mumatha makape inu……….paja nonse muli ndi Ma 1 pa sado………

  21. w.moir says:

    are these leader of the people or…of their interest; with this daily changes I can guarantee Malawi will never be the same again.

  22. Patriot says:

    Tikazafika December 31, 2014, Kwacha izakhala K1789 to Dollar.
    Chala mwamba chala mwamba
    Woyeee woyeee woyeees
    kikikiki

    1. You must know!!!!!! says:

      My brother you are correct: Kwacha is expected to be promoted to 1USD= MK3500 by March,2015. This is what we call DPP chitukuko, promotion to kwacha, promotion to fuel, and basic commodities. These are political, socio-economic Idealogies of DPP. Dpppppppppppp, woyeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeee

      1. Inu says:

        Is this just a wild guess or wishful thinking? I dont think the dollar will even pass 700 MK. What you are assuming is that Malawians will still consume as thay have always which is not the case. As goods become more expesnive, demand will go down particularly on luxuries like DSTV and others. That takes awy the pressure from forex. The exchange rate is matter of demand and supply and the Kwacha can only fall to a certain level beyond which it will become impossible to buy. For instance some people use forex to go buy and tomatoes. Thoese will find that importing tomatoes is more expensive than just buying it locally. So your wild guesses of Kwacha falling to that level are not true because if that would happen, I dont thnk that many people would afford anything

  23. What I don’t understand is that when the Mutharikas are in reign, immediately there is scarcity of forex, fuel and prices of commodities skyrocket like nobody’s business. Now, what’s the point of being ruled by a professor if he is failing to control the inflation, he is failing to maintain the supplies of fuel, he is failing in many faculties? With JB we understood, she was not conversant with some of governing policies….But with Mutharika!!!!! What should we say then? Malawi has no prominent people to lead the nation from abject poverty to properity????

    1. Inu says:

      I think Malawians we lack depth in understanding issues. I dont know wheter this is just politics or that we are dull. The new DPP government has not done anything to make the Kwacha depreciate. They have inerited the government when there is no donor funds. This is the true reflection of the Malawi economy without donor assistance. What this should tell us is that there is more that needs t be done in order fror us to have a viable economy and sustainbale livelihoods. This is what we should be discussing. Aid was cut in September 2013 when PP was still in government and has not resumed since then.

  24. eric mpota says:

    ifunika kungosegula maso kumaona kuti ngini ikuenda bwanji.hustle + ganjer farming!

  25. Milambo III says:

    signs of a failed government!!!! they used to criticise JB govt on the kwacha floatation now that the steering wheel is in their hands they are failing to control it. Mr Ibu zawavutapo apa!!!!

  26. Inu says:

    This is pure economic principles. If the government tries to fix the kwacha we will end up where we were more than two years ago where imports became scarce. Withe the dollar so high, people on their own start prioritizing things. For instance many may opt not to pay for dstv premium or other luxuries that one can live without. By that, the government save some of the forex. The idea with the free flow of the Kwacha is that demand and supply should balance. The Kwacha can depreciate but only to a certain point beyond which nobody will be willing to buy. That is where its true value is.

  27. Tiko says:

    Mmhh life getting harder and harder.

  28. Lino says:

    Lakulakani dzikoli.

  29. fkr says:

    You guys voted for these clowns. They have no clue what they are doing. Just heading straight into a brick wall and hoping that God will save them. Tough. Yes its going to be extremely tough. No fuel. Yes no fuel is coming. Power Black outs. Yes yes yes it’s all coming back again. The only thing these guys are interested in is their own pockets.

  30. McGoodson Ngoma says:

    Life will be very tough here in malawi than before

  31. Mccarty says:

    Malawi won’t fix kwacha exchange, ndizimenezo a DPP How can you run the government with stolen votes, Musova simunti. God is punishing you” this is just beginning! More disaster are still to come.

  32. osita osadebe says:

    U are de fucken distroyers. Nw malawi is fucken poor than any other country in de world. Chomwe mukuziwa inu ndi kuba ndalama za boma agalu inu. Mungoti mitu ikulu ikuluyo pwiiii kumeneneko. Fotsek mbabva inu.

  33. Malawi says:

    The problem is that Mr Gondwe and the rest of in the inner circle are well off and they dont care. Even if a bag of maize was to be selling at K1m abag they are well off to afford that. This man knows the truth and he is just apeasing his boss to protect his job. I would not be surprised if i learn that Malawi has no reserves. Ordinary ple are suffering bcoz of pple like you. How can a sensoble person say do not panick yet everything is hicking and the living standards are only favouring the elite few. Komatu nthawi zina ndibwino kumaganizila anthu tikuvutika mmalawi muno.

  34. verson says:

    Less than a month import cover? How? I thot just a few months ago when we had that clueless woman president we had reached 3 months import cover? I remember to have seen a commercial on TV for Nedbank wooing people to buy forex from them? Meaning they had plenty. Who is better then? Clueless woman or clue full man?

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