Malawi’s foreign exchange reserves continue to dwindle, a situation continue market analysts have described as worrying, according to the latest market weekly review produced by Alliance Capital Limited.
The Malawi Kwacha also depreciated from MK328.60 to MWK 329.10 against the US Dollar representing a 0.2 percent loss.
“The erratic rain pattern being experienced in the country may negatively affect both the green gold and maize; the fertilizer subsidy hiccups aren’t helping either,” said Alliance Capital Limited which is headed by Chikavu Nyirenda
Almost half way into the lean period, Malawi’s import cover is now at a worrying 0.51 months from 0.64 months and this means Malawi is experiencing more problems in servicing its foreign debts and obligations.
Gross official reserves decreased from US$120m as at 16 November, 2012 to US$96m on 23 November, 2012.
The erratic supply of fuel among other things is largely symptomatic of Malawi’s precarious moribund economy and an unhealthy balance of payment conundrum.
According to International Monetary Fund (IMF) countries are required to have a minimum of three months import cover.
Malawi requires three months of foreign exchange reserves of $387 million.
The declining trend in forex reserves should be a cause of worry for consumers, the government and industry as the country is heading towards the peak of the lean period up to March 2013 during which demand for foreign currency sours due to importation of farm input supplies for the farming season while exports contract.