Forex reserves stable
The foreign exchange reserves position has remained stable within the requirement of three months’ worth of imports, according to the Reserve Bank of Malawi (RBM).
RBM says this has also influenced stability in the exchange rate currently trading at K733 to the dollar.
The figures show that the country is currently sitting on $600 million in reserves, representing 2.9 months of import cover.
Private sector reserves now stand at $335 million, representing 1.6 months of imports.
According to the Central Bank, this is influenced by “sound monetary policies” coupled with reduced levels of borrowing by Treasury.
The country is out of the lean period when demand for foreign exchange goes down.
RBM Publicist, Mbane Ngwira, is optimistic that the current position is sustainable.
“We have been on this range for some time now. It is emanating from a combination of policies making us achieve the required levels. We know that we will still maintain that level as government expenditure reduces coupled with a slash in the budget,” Ngwira said.
He said there has also been an improvement in management of foreign exchange on the market.
This has had a direct impact on the standing of the kwacha which has been seen firming in the currency basket since the beginning of the year.
The good tidings come a few months since the close of the 2016/17 tobacco marketing season. The season was characterised by high rejection rates and poor prices.
But Ngiwra said input from tobacco is now having less impact on the overall foreign reserves position.
At the end of last year, RBM said there was more room for improved foreign reserves position and for the kwacha to stabilise following fiscal and monetary policy actions being implemented.