Following mountainous pressures from the donor community and International Monetary Fund (IMF), Malawi has cowered and is doing something about its overvalued currency, the kwacha.
Reserve Bank of Malawi (RBM) revealed that kwacha’s strength is weakening against other currencies including the United States dollar.
Despite President Bingu wa Mutharika’s stubbornness that kwacha is not going to be devalued RBM says the local unit weakened against the United States Dollar last week, losing 0.47 percentage points to close at K164.4003 from previously K163.6180.
“The kwacha lost ground against the euro as the latter, rose 0.6 per cent to K210.6626, it was equally weaker against South African Rand, closing at K20.4199, 2 per cent above last week’s close of K20.0100.
“The British Pound Sterling, on the other hand was down 0.5 percentage points to K252.0750 from K253.5261. The Kwacha also lost ground to the Yen which appreciated 0.99 per cent to K21417 to cap a rather poor week for the local currency,” the report from RBM said.
Gross official foreign exchange reserves which have been said to include even personal money in foreign denominated accounts are also diminishing at $190 million representing only 1.47 months import cover.
The status is despite government borrowing $200 million to jump start the economy that has been in a coma for the past 16 months.
With forex still short RBM said liquidity was rising although they tried to manage it by introducing a K30 billion bond mean to mop excess cash on the market.
Hard cash of K17.4 billion was in circulation.