Illegal foreign currency dealers have sprouted in the commercial city of Blantyre and capital city Lilongwe enticing customers with higher exchange rates of foreign currency, Nyasa Times has discovered.
These `black market `brokers, who ply their trade opposite MSB Bank in Blantyre and near Nico Building in Lilongwe, have stepped up gear to get the much needed forex from desperate travellers who avoid delays at commercial banks.
Reserve Bank of Malawi devalued the kwacha from the official peg of 168 to the dollar to about 250. This was, in part, to crowd out the black market and fully liberalise the local currency.
“What was happening soon after devaluation was that commercial banks were offering good rates compared to black market but the situation is changing now,” a UK based Malawian who had just changed his pounds at K490 told the Nyasa Times.
But a dealer from National Bank of Malawi said Malawians patronising the parallel market are losing out and risk being given fake foreign currency.
He said the bank offers K284 for a dollar, K449 a pound and K36 South African rand.
“These rates are just indicative meaning they can go up or down depending on market conditions. Government should crack down on these dealers as they are killing formal business. We pay tax they don’t,” the NBM dealer said.
A buyer found near Nico Building in Lilongwe said the availability of forex in Malawi has improved for the better but the black market was still a necessary evil.
He said he went for the black market because there are large cues at most commercial banks and there are restrictions of how much one can buy or change with a lot of paper work involved.
Most black market dealers could not speak on record said their business was thriving because they are not affected by Reserve Bank of Malawi regulations.
“The only threat now is that we have seen many foreigners especially from Zimbabwe are killing our business. They come with lots of dollars.”
In Zimbabwe, following the collapse of their local currency, the US dollar is the semi official medium of exchange.
Following resumption of foreign aid and the opening of loan pipes from the International Monetary Fund (IMF) Malawi is assured of a sustained inflow of foreign currency in the short term, government sources say.
Another devaluation looming
Meanwhile, published reports say money market analysts have warned that the Malawi kwacha risks a ‘dramatic’ depreciation if monetary authorities relax in the wake of huge demand for foreign exchange
Alliance Capital Limited has observed in its latest market commentary that the kwacha experienced a further depreciation from an average of K278.43 to K280.40 against the US dollar as at August 17 2012.
“Despite the known bureaucratic tendencies in most governments, we would urge that the much-applauded ‘goodwill’ shown to the country must be translated into ‘good faith’ timely to avert a possible forex crunch that could derail the positive developments that the country has experienced since April, 2012,” says Alliance Capital Limited.
President of Financial Market Dealers Association (Fimda) Lusekelo Kaoloka last week called for market intervention by way of injecting foreign currency to help stabilise the fluctuating local currency.Follow and Subscribe Nyasa TV :