Forex inflows shrinking
Foreign exchange inflows into the country drastically dropped by 63.8 percent from $100.1 million in July 2017 to $36.3 million in August, figures from the Reserve Bank of Malawi (RBM) have shown.
The drop is attributed to a decline in foreign exchange purchases and swaps.
The August 2017 foreign exchange inflow amount is 49 percent lower than the $71.4 million recorded in August 2016.
The drop in inflows also led to a drop in the gross official reserves to $645 million as at the end of August 2017 from $698.3 million recorded in July 2017.
Consequently, prospective import coverage dropped to 3.1 months from 3.3 months in the previous month, according to RBM.
However, as at the end of last week, gross official reserves had substantially improved, rising to $726.79 million, representing 3.48 months of imports.
Earlier, RBM expressed optimism that Malawi is not likely to experience the usual seasonal lean period in terms of foreign exchange availability, thereby cementing the current stability of the exchange rate.”
In its August Monthly Economic Review, RBM said foreign exchange purchases, however, dropped to $18.2 million from $41.9 recorded in the preceding month.
Swaps shrunk to $6 million from $50 million recorded in July 2017.
“However, project funds increased to $11.8 million from $3.2 million,” RBM indicated in the review.
The central bank further said outlays of foreign exchange moderated to $73.3 million in August 2017 from $87.5 million in the previous month, and $81.8 million in August 2016.
The outflows largely constituted sales to the market, according to RBM.
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