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Kwacha drops marginally in third quarter

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The Kwacha continued to fall, albeit marginally, against other major trading currencies in the third quarter of the year.

Figures contained in the Reserve Bank of Malawi (RBM)’s fourth Monetary Policy Committee (MPC) statement show that, during the period under review, the Kwacha lost about K0.43, as it was trading at K1,033 to the dollar in authorised dealer banks.

In forex bureaux, the Kwacha was trading at K1, 357 to the dollar, losing about K96.96.

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“Foreign exchange supply-demand imbalances persisted in the domestic market, resulting in further weakening of the Kwacha,” the statement reads.

Latest figures, however, show that, by October 26, the local currency was trading at an average K1, 400 to the dollar in money bureaux and on the parallel market.

The unit is losing its grip despite optimism from monetary authorities that the recent 25 percent devaluation of the Kwacha would contain the pressure.

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RBM Governor Wilson Banda said devaluation was aimed at giving the currency its true value and aligning it with the then market trends, where the disparity between the black market rate and the official rate was big.

In a recent interview, Banda insisted that devaluation has stabilised Kwacha and has served its purpose but could not commit to another devaluation of the local unit.

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