Reserve Bank of Malawi speaks against the fixing of Kwacha currency

The Reserve Bank of Malawi (RBM) authorities are strongly speaking against the call to fix the Malawi kwacha saying doing so would exacerbate the pain which Malawians are currently experiencing  due to the floatation of the Malawi currency.

The need to fix the kwacha is among the demand by the Consumers Association of Malawi which has put it as the basis of their planned January 17 demonstration.

Answering questions on Zodiak Broadcasting Station (ZBS) on Monday, President Joyce Banda maintained that there will be no turning back on floatation of the kwacha despite calls by Cama who are planning January 17 demonstrations to protest the resultant high cost of living.

The President expressed optimism that economic recovery is on course, but admitted that Malawians will have to persevere for a while before full recovery.

Chuka: The central bank is comfortable with the current exchange rate system which Malawi is following

RBM governor Charles Chuka has reiterated that the floatation of the currency is the necessary evil which Malawians have to endure saying  the pain  they are going through today will go with the sale of this year’s farm produce.

“Remember the government has spent ten percent of revenues to support certain interventions to caution people from the impact of the exchange rate. It has also spent K57 billion in fertilizers to make sure that Malawians produce,” he says.

Chuka says the problem with past policies is that people produced maize but they were selling it at lower price.

“Farmers must sell at a price that is equivalent and reflect the price of the exchange rate. As we go along, I hope that the markets in this country and the organization of farmers will benefit from such exchange rate and improve their lives much more. It’s true that the exchange policy that is currently in place is hurting but the government has tried to cushion the poorest and that Malawians will soon start to live gain as our neighbours in this region,” Chuka says.

Chuka says fixing the currency is not a good idea because, he says, foreign exchange is like the commodity.

“Think of anything like tomatoes and any commodity. When there are few players that are producing that product and many more players looking for that product, there is no way you can fix the price because when you fix the price you are favoring only those that are buying the product while destroying the one who is producing the product”.

Malawi’s export earnings largely rely on agriculture which contributes 60 percent to national foreign exchange earnings.

“What we are doing is ensuring that all Malawians have equal rights and equal access to American dollars and other foreign currencies for their businesses. The exchange rate that we have in place now ensures that the rights of Malawians to economic freedoms are provided for.  To improve their lives those farmers we need an appropriate exchange rate because by exporting we create jobs in this country but in importing we are sending out jobs”.

Chuka  says for every Malawian who understands what is going on will support this process because “that is the only way to create the dollar that we have been looking for”.

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