RBM effect measures to resolve forex challenges

Officials from the Reserve Bank of Malawi say the central bank has resolved to let the country’s exchange rate float without tight controls because forex is now available following the devaluation of the Kwacha.

This comes two months after the central bank devalued the Malawi Kwacha by 25 percent in an effort to realign the local exchange rate.

President Dr Lazarus McCarthy Chakwera touted the devaluation of the Kwacha as the only remedy to turn around the economy hit by shortages of forex.

The economy had been battered by the two-year Covid-19 pandemic, natural calamities such as Cyclone Ana and the war in Ukraine.

In a statement, RBM Governor Wilson Banda says the Kwacha has registered some visible impact of the devaluation of the exchange rate.

Banda states that the devaluation of the Kwacha has so far achieved the alignment of the currency with other foreign currencies and so far, forex has started flowing.

However, there were concerns that despite the devaluation the authorities were still trying to control the exchange rate, hence calling for a further devaluation.

But in reaction Banda stresses that they will allow the exchange rate to flow according to market fundamentals and adopting a more flexible regime.

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