Informal exchange rate of the green buck has taken a knock, slipping from about K320 to a dollar to about K285 a dollar just hours after the donors under the Common Approach to Budgetary Support (CABS) indicated that their aid to Malawi was on the way.
The all important grouping of Malawi donors were meeting in Malawi`s capital Lilongwe to review the second quarter of this year when the news of committed International Monetary Fund (IMF) decision to send a green flag for individual donors start to disburse aid filtered through the windows.
At various point where “black markets” rule, the green buck was being quoted to have fallen from K320 to K300 to a dollar on Tuesday and by morning of Wednesday the market has further reduced the price of the dollar to K285.
“The forex bureaux are opening this week and we don’t want to make a loss….tingodzitaya izi (We better just sell them to avoid losses),” said one cash changer.
Meanwhile, news that the bureaux are opening shops has also worried the commercial banks whose buying rates of the hard currency have been on the lower end therefore losing most of the much needed hard currency to either black market or the forex bureaux.
“We are yet to see the real market forces at play this time, the black market are out of the equation slowly but now it will be a tug of war between bureaux operators and the commercial banks. In the end, the customer will win and the Kwacha exchange rate will start to relatively appreciate,” said one of bankers in Lilongwe.
For years the kwacha’s value has been kept artificially high, but on Monday this was scrapped and the currency was “fully liberalised”.