The local currency, the kwacha, has remained firm to major trading currencies for the past 14 months, but experienced a slight depreciation last month by shedding off K1, despite foreign exchange reserves increasing during the month, according to Reserve Bank of Malawi (RBM).
But the central bank and economic commentators have said there is no cause to pres spanick button on the slight depreciation of the local unit but rather a normal market occurrence.
According to a recent RBM monthly average exchange rates report, the kwacha at stood steadily at K733 for the past months lost a kwacha to stand at K734 in March.
RBM governor Dalitso Kabambe, in the first Monetary Policy Committee (MPC) statement released end last month noted that the foreign exchange market has remained broadly stable for more than a year, supported by high levels of both official and private sector foreign exchange reserves.
“The expected inflows of foreign currency connected with the start of the agriculture marketing season will foster a further build-up of the international reserves. As such, international reserves will be maintained at a minimum of three months of import cover, thereby maintaining confidence in the foreign exchange market,” he said.
Malawi experiences significant seasonal volatility in its foreign exchange inflows, with earnings from the key tobacco export crop concentrated during a period between March to August.Follow and Subscribe Nyasa TV :