Annual average Kwacha to Dollar rate tumbled by 29 percent between 2018 and 2022 in authorised dealer banks, figures from the Reserve Bank of Malawi (RBM) show.
The annual average selling rate of the unit depreciated to K950.40 in 2022 from K735.01 recorded in 2018.
The local unit further depreciated by 28 percent against the Pound of Britain to K1,255.68 in 2022 from K984.30 in 2018.
It lost about 26 percent against the Euro to K1,098.21 from K869.89 in 2018, and 14 percent against South Africa’s Rand to K63.50 from K56.16 in 2018.
However, daily rates show that the Kwacha was stable in January, selling at K1,036 to a dollar.
The local unit rates against the Pound, Euro and Rand were seen fluctuating throughout the month.
In an interview, money market analyst Albert Nyirenda claimed that the dollar rate is somehow controlled by the central bank, whereas the other currencies are left to float according to market trends.
He said that the dollar is not correctly priced against the local unit, hence the recent introduction of dollar auctions.
“The introduction of the auction will lead to depreciation of the Kwacha. Once there will be successful bidders on the auction, it will automatically mean devaluation,” Nyirenda said.
In a separate interview, Financial Market Dealers Association President Leslie Fatch said Kwacha stability in January generally entails the local unit is managed.
“We have experienced shortages in currency (forex) supply until the tobacco season opens, which eases the pressure on the supply.
“Due to the backlog in demand, however, we have noticed that, in recent years, supply has not been able to clear the entire backlog in demand, hence affecting the rate at which the Kwacha can appreciate,” Fatch said.
