The Malawi Kwacha picked up to K1,860 to a dollar in foreign exchange bureaux across the country, figures from the Reserve Bank of Malawi (RBM) show.
The rate is higher than the K1,126 official rate displayed by the central bank and authorised dealer banks (ADB).
This means spread between the official TT rate that commercial banks rate display now hovers around K734.
This comes as RBM continues conducting foreign exchange auctions which it believes will help with the realisation of the true value of the local unit against its major trading partners.
While agreeing with the notion that auction was a way of identifying the true value of the local currency, economist Edward Chilima wondered if the results of the auctions are a true reflection of the true value of the currency.
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“The Kwacha will remain weak in the absence of exports that can improve the supply of foreign currency on the local currency,” Chilima said.
Financial market analyst Bond Mtembezeka said despite the auctions that aim at realigning the Kwacha to other foreign currencies, the outlook is not promising as the country is fast approaching the lean period.
He believes there is a need for deliberate policies that should support tobacco in foreign exchange generation because as things stand, the seasonality of the tobacco market does not help the country.
“The supply side is still very weak and it has gotten worse with the ending of the tobacco marketing season and all this is happening when demand side pressures are still significantly high as we import almost everything,” Mtembezeka said.
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Recently, RBM Governor Wilson Banda defended the foreign exchange auctions, indicating that the introduction of the foreign exchange auction market was to remove speculation by discovering the real price of the exchange rate.
Banda said, with the intervention, the central bank wants to get the true value of the Kwacha.
In May 2022, the Kwacha was devalued by 25 percent, a move was meant to align foreign exchange supply to the macroeconomic fundamentals according to the central bank.
However, mismatches between forex supply and demand continued to exert pressure on the local unit’s footing.
