Banda’s devaluation remark sends jitters-paper

Malawi leader Mrs. Joyce Banda has faced rare criticism from some experts following her public declaration that Malawi kwacha would be devalued.

The experts told newly launched The Business Times newspaper of Times group that such pre-emption could create panic resulting in parallel market taking advantage of the situation.

Dalitso Kubalasa of Malawi Economic Justice Network (Mejn) also faulted Malawi leader for announcing an impending devaluation saying such move would trigger double devaluation once IMF team comes in the country and find higher rate on parallel market.

Kubalasa: Faults President Banda

“It’s unfortunate that the president has gone to the podium announcing that she would devalue (the kwacha). That creates panic and people will start repositioning themselves. Those with [forex] bills panic too and the parallel market will take advantage of the situation to [and increase rates even further],” the paper quoted an anonymous Lilongwe based banker as saying.

Consumers Association of Malawi boss John Kapito said imminent devaluation was long overdue and has come at a time when the market has already adjusted commodity prices basing on current market exchange rates.

He however appealed to Malawians to adapt to effects of devaluation saying they have far reaching consequences in any economy.

Kapito’s sentiments were concurred by a renowned financial market analyst Chikavu Nyirenda saying: “The intended devaluation which the market says is pegged at 40 percent will translate into an exchange of MK250 per US dollar and this will just formalize what the market is already offering.

Meanwhile, government has come out fighting on the issue saying President Banda’s public declaration would not have grave consequences.

Finance minister Dr. Ken Lipenga said by virtue of the president’s declaration it does not necessarily mean the kwacha has been devalued.

Lipenga further denied rumors making rounds that the government would devalue the kwacha at between 30 and 40 percent margin.

“Implementation will depend on the context of what we as government are working in liaison with what the IMF comes up with,” Lipenga told paper.

Devaluation debacle dogged last days of late president Bingu wa Mutharika’s administration as he arrogantly put his guns down by categorically refusing to devalue the kwacha as per the request of IMF in order to arrest worsening shortage of forex in Malawi.

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