The Malawi Kwacha has slumped by 6.4 percent in the first 24 days of 2016, slipping to K745 to the dollar on Friday from K700 to the green buck at the start of the year.
The development has sent shockwaves among Malawians as they see prices of goods and services going up on a daily basis.
In random interviews, the consumers believe the sharp fall of the kwacha needs to be checked sooner rather than later, if the poorest of the poor Malawians are to survive.
Justin Bindula, a resident of Mbayani Township in Blantyre, said the sharp fall of the kwacha has significantly eroded the buying power of the local currency.
Bindula said if the fall continues at the current rate, many Malawians will be entrenched in deep-rooted poverty.
“The falling kwacha is becoming unbearable. Every day you go into a shop, you find a new price for almost all the goods.
“Surprisingly, even locally made products such as sugar, which we don’t need forex to import, are also going up,” said Bindula.
Brenda Nampeya, a trader who sources merchandise from China, also bemoaned the sharp fall of the kwacha.
“With the significant fall of the currency, air fares have also gone up in kwacha terms. And when we try to pass on the cost to buyers, they are not buying as they think our goods are expensive,” said Nampeya.
Chancellor College economics professor Ben Kalua said failure by the system to attract investors in the import substitution area is costing Malawi a lot since the adoption of the free-floating exchange rate regime in May 2012.
Kalua said because of failure to attract investors to produce various commodities locally, Malawians continue to import almost anything, thereby draining the little forex available and exerting pressure on the local currency.
Speaking in an interview on the sidelines of a Financial Market Dealers Association (Fimda) of Malawi annual conference in Mangochi in October, Finance Minister Goodall Gondwe admitted that the country has a challenging task to halt the sharp fall of the kwacha.
Gondwe said authorities are looking at all available options on how best to bring about stability in the local currency.
Fimda president, Alfred Nhlema, in a recent interview underscored the need for long-lasting interventions such as a deliberate policy to promote production of import-substituting commodities, safeguarding the exportation of our commodities through established channels like commodity exchanges where the price discovery mechanism is transparent and radical promotion of the tourism sector.
“Diversification into mining and extraction of minerals should also be speeded up so that Malawians can start to benefit from its mother nature. In the short-term, the Central Bank could intervene in the market to ease the current pressure given availability of resources,” said Nhlema.
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