There is now an improved availability of foreign exchange since Malawi devalued its currency, Dora Banda, Marketing Manageress of state-run Malawi Savings Bank has said.
Banda said people were now using bank’s bureau to change their money unlike the past when they were going for black market.
“People have started bringing forex but in small amounts,” Banda told Malawi News Agency.
“A dollar at black market is at K280 and is being sold at K290 while at the bank’s bureau we are buying at K270 and sells it at K280. I urge customers to exchange their money through us,” she said.
On the black market, the US dollar was fetching more than 300 kwacha, a disparity that drove foreign currency out of the banking system and into the hands of informal dealers.
Banda urged people to “produce more so that the goods can be exported as that can be the only way to sustain the availability of Forex in the country.”
The global lender International Monetary Fund (IMF) has for months called for a devaluation to end a shortage of foreign currency that has left Malawi unable to import enough fuel to keep the nation running.
It suspended its programme with Malawi last year, for a credit of nearly $80m that should have cushioned foreign-exchange shortages.
Several key donors – including former colonial power Britain – also suspended aid to Malawi.
The late president, Bingu wa Mutharika, had fixed the exchange rate in 2005, and had steadfastly refused to make a major devaluation, which he argued would hurt the poor.
After Mutharika’s sudden death on April 5, the new president, Joyce Banda, has moved quickly to restore relations with international lenders and donors.
Reserve Bank of Malawi governor Charles Chuka also announced a series of reforms to loosen controls on foreign currency.
“All forex restrictions announced last year in August on forex bureau have been suspended since this is now a free floating foreign exchange regime,” Chuka said.
The bank said the devaluation of the kwacha was further expected to have the effect of reducing demand for imports of consumer goods in favour of domestically made products.
“Most importantly, it should also, together with the liberalisation of foreign-exchange market, contribute to government’s efforts to reach early agreement with the IMF which should lead to unlocking donor flows in the next few months,” it said.Follow and Subscribe Nyasa TV :