The Kwacha depreciated by on average 2.09 percent against some eight major trading currencies in August, the latest monthly economic review by the Reserve Bank of Malawi (RBM) reveals.
According to the report, the local unit recorded a marginal depreciation of 0.02 percent against the US dollar, settling at K1, 750.31 per dollar at the end of the month under review.
More significant losses were seen against the British pound, weakening by 2.5 percent to close at K2, 368.68, and a 2.4 percent depreciation against the euro, making the exchange rate reach K1, 994.06. The Kwacha faced its steepest decline against the Japanese yen, falling by 5.5 percent to K11.96 per yen. The Chinese yuan also gained ground against the Kwacha, which depreciated by two percent to reach K244.53 per yuan.
Closer to home, the Kwacha lost ground against both the South African rand and the Zambian Kwacha, recording a 3.7 percent depreciation against the rand to K101.10 and a 0.8 percent depreciation to K66.82 against the Zambian Kwacha.
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The only positive movement came against the Indian rupee, with the Kwacha appreciating by 0.2 percent to K20.67.
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In an earlier interview, President of Financial Market Dealers Association (Fimda) Leslie Fatch said the trend is reflective of the deficit in balance of trade that the country has been operating on.
Economist Marvin Banda said the deviations are caused by seasonal variations in market conditions.
“There is [however] heightened risk of failing to pay foreign obligations and import bills on time which can have a compounding negative effect on the government’s ability to meet market demand for strategic goods and services such as fuel,” Banda said.
Figures on Malawi’s international merchandise trade by the National Statistical Office (NSO) recently show a 10 percent increase in the trade deficit year-on-year with the trade balance widening to a deficit of -K227.66 billion compared to a deficit of -K206.09 billion in August 2023.
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According to the figures, total imports increased to K549.65 billion while exports reached K321.99 billion.
