Malawi Kwacha appreciates further: Tobacco, donor aid flow leverages forex reserves
Increased and continued flows of donor aid and foreign exchange earnings from tobacco sales continue to stabilise the Kwacha which on Friday, May 17 closed trading at K354 against the US dollar.
This is an appreciation from the previous week’s K380 per dollar which was trending from the all time low of K420 per dollar, slumping after the Kwacha was let loose 12 months ago when it was trading at K169 per dollar.
Tobacco Control Commission (TCC) said as of May 10 which was the end of week nine of tobacco sales, the so called green gold for Malawi had earned the economy $93.2 million.
This is also noted by the Reserve Bank of Malawi (RBM) which highlighted that gross foreign exchange reserves increased to 1.65 months on May 10 from 1.26 months import cover on May 3, representing an increase of 31 percent.
The central bank said gross foreign exchange reserves have increased to $306 million from $240 million during the review period but still the accumulation is below the recommended base of three months of import cover.
Some economic reports have attributed the sudden availability of foreign exchange to the scarcity of the Kwacha on the market after authorities continued mopping up of liquidity and RBM’s vigilance in buying foreign exchange from the market totalling K17.4billion between April 26 and May 13.
In her State of the Nation address in Parliament on Friday, Malawi President Joyce Banda said her government would end the forex availability challenges by among others introducing tea auction floors in the country, boost the mining sector and local production of goods for the export market.
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