Malawi Kwacha depreciates against major currencies
The Malawi currency, the kwacha, has been losing value against all major world currencies, according to published report.
Reserve Bank of Malawi spokesman Ralph Tseka confirmed that the depreciation, saying it is within a set band where the kwacha is officially allowed to fluctuate.
He commented after Business Times had observed from the market that kwacha’s strength is weakening against other currencies including the United States dollar.
“The daily rates are what we call high frequency data and there are bound to be such movements but cannot go beyond K1,” said Tseka, according to Business Times.
The paper reports that the recent movements in the kwacha rates have “created supposition within the financial sector and business community that the currency is being devalued secretly.”
By Wednesday, the paper reports that bank rates the depreciation of the kwacha to the dollar was at K168.36, the British Pound was selling at K263.08 and the South African Rand at K21.21.
The paper also quoted Alliance Capital Limited Chief Executive Chikavu Nyirenda who said the Kwacha went down 1.03 percent against the United States dollar, closing at K166.0958 from K163.7515 the week before.
The the International Monetary Fund (IMF) asked Malawi to devalue the official exchange rate further to between 230 to 250 against the dollar to address a foreign exchange shortage and stem a thriving black market, but President Bingu wa Mutharika is adamant that he will not allow official devaluation.
Malawi devalued the kwacha by 10% in August, 2011 but at 166 kwacha to the dollar, the official rate is not as attractive as the black market rate of between 240 and 250 kwacha.
The IMF said the overvalued exchange rate has led to foreign exchange market rationing and multiple exchange rates which are key deterrents to private sector activity and diversification.
