The Malawi Kwacha has quickened to K1800 to the dollar on the black market, further widening the yawning gap that was there between the official and parallel market rates.
Observation by The Daily Times in Malawi’s Capital, Lilongwe, revealed that black market players were buying the greenback at between K1700 and K1750 and selling at K1800.
Black market operators confided in The Daily Times Monday that the recent adjustment was in response to the 2.68 percent depreciation of the official exchange rate effected last week.
The operators justified the upward adjustment, saying they are buying the dollar at a premium following the depreciation.
At the same time, foreign exchange bureaus were selling the dollar an average price of K1635.
In commercial banks, the dollar was selling at K1063.86.
The development means that the spread between the official exchange rate and the black market exchange rate has widened further from around K500 before the depreciation last week to K700.
Ironically, the pressure on the Kwacha is happening at a time when the country is in the middle of tobacco sales.
As at Friday, Malawi had realised about $218.5 million from the sale of 94.28 million kilogrammes of the green gold.
Recently the Reserve Bank of Malawi introduced forex auctions as one way of closing the gap between official and parallel market rates.
Last week, RBM Governor Wilson Banda described the recent forex auction held on June 19 as successful, saying all ADBs participated.
“As per the bank’s communication from 12th January 2023 on foreign exchange auctions, these auctions will determine the market clearing price of the Malawi Kwacha (MWK) against the United States Dollar (USD) and other major currencies.
“In this regard, please be advised that effective tomorrow, 21 June 2023, the maximum selling price shall be MWK 1,063.86 per USD1. Please be reminded that all foreign currencies should be priced according to the 2019 Guidelines for Foreign Exchange Trading Activities,” Banda said.
Economics Association of Malawi (Ecama) Executive Director Frank Chikuta Monday said his organisation will have to do its own investigations to establish the reasons behind the elevated black market rates.
