Kwacha depreciation hits 28.5%, worse than last year
Malawi Kwacha has depreciated by 28.5 percent compared to a 14.5 annual depreciation rate recorded during the same period last year.
And according to a report released by advisory firm, Nico Asset Managers, the local unit will continue to depreciate as the lean season advances.
As at November 30, 2015, Authorized Dealer Banks were trading the kwacha at K604. 84 to the dollar but as at close of business on Wednesday, the kwacha was on average trading at K627 in exchange for the dollar.
The loss in the kwacha value against major international trading currencies has mainly been attributed to a combination of a strengthening US dollar and speculation in the run up to the lean season. The situation has been worsened by low revenue from tobacco.
“The exchange rate is expected to continue depreciating in the short term as the lean season continues. This could be mitigated if the authorities sell forex to the private sector,” suggests the advisory firm in the report.
Meanwhile liquidity levels are also reported to have dropped in November 2015, averaging K5.57 billion per day compared to K15.74 billion per day in the preceding month.
Total forex reserves also decreased to US$917 million, representing 4.39 worth of imports cover as at end of last month from US$947 million as at end of October, 2015.
