By Pemphero Malimba:
Pressure continues to mount on the local trading unit, the Malawi Kwacha, as it is now trading at K2,500 to the dollar on the parallel market, Times Business has established.
This is despite the dollar trading at the official rate of K1,751 in high street banks.
The development means that the gap between the official and parallel forex market has grown to a whooping K750.
As at Thursday, sellers were selling the dollar at black market operators at K2,400.
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The mounting pressure on the Kwacha on the parallel market comes a few days after a forex auction held on June 13 maintained the value of the Kwacha at K1,751 to the dollar.
“Based on the results of the auction, the market selling price shall remain at K1,751 per dollar,” reads a statement signed by RBM Governor Wilson Banda.
In an interview Thursday, Financial Market Dealers Association (Fimda) President Leslie Fatch said the pressure on the local currency could be as a result of speculation.
“Most of the time this is incited by speculation; so, possibly, there is speculation I think from those that are trading on the parallel market.
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“But the important factor is on the supply and demand mechanics. We have always said the price is determined usually as a function of supply and demand; so, probably that reflects that there is still substantial demand for forex in the market,” Fatch said.
In recent weeks, there has been growing speculation on a possible depreciation of the Kwacha.
RBM spokesperson Mark Lungu said there are no plans for devaluation.
“Operating a business of buying and selling foreign exchange without a licence from the central bank is illegal and therefore a criminal offence.
“The efforts to deal with such criminal activities is an ongoing exercise alongside the Malawi Police Service,” Lungu said.
