Kwacha free fall resurfaces
The Malawi Kwacha has gone into a free fall mode again, tumbling beyond the K600 per dollar mark to trade at an average of K620 to the green buck as at Tuesday this week.
This is despite the kwacha showing signs of stabilisation in October when it was trading at K590 to the green buck.
A visit to some foreign exchange bureaus in the commercial capital, Blantyre showed that the kwacha is also heavily losing ground to other international currencies selling at around K930 to the British Pound with the Euro averaging K665.
The development comes at a time when Malawi’s main foreign exchange cash cow, the tobacco auction, is closed and will only reopen next year around April.
The free fall of the kwacha is also happening at a time when extremely high interest rates coupled with frequent blackouts are chocking the private sector from producing for export.
Consumers Association of Malawi (Cama) executive director John Kapito said yesterday, the falling kwacha is having a huge impact on the welfare of consumers.
“The falling currency is fast eating the little disposable income that Malawians have and the bad thing is that the depreciation has restarted at a time when we are heading towards the festive season.
“It is very likely that consumers will have a miserable festive season if authorities do not intervene,” said Kapito.
Economic analysts have also observed that it is extremely tricky for Malawi to maintain a floating exchange rate regime in a predominantly importing nation.
They believe the falling kwacha will likely push up the prices of fuel, fertiliser, pharmaceuticals and maize in an environment where people’s take-home packages have remained constant.
But speaking during the Financial Market Dealers Association (Fimda) annual conference in Mangochi last month, Finance Minister Goodall Gondwe said expecting the kwacha to remain stable after the various shocks the economy has gone through this year was tantamount to asking for a miracle.
“Did you expect the kwacha to remain stable after losing donor support? Did you expect the kwacha to remain strong after almost all global economies took a beating from the appreciating dollar? Did you expect the kwacha to remain strong after poor tobacco sales? Did you expect the kwacha to remain strong after the flush floods that swept away many districts in January?” Wondered Gondwe.
The minister said government will still find means to ensure that it implements the best options to arrest the sliding kwacha