The Malawi kwacha was more resilient in March, maintaining its stance against the US Dollar and gaining value against the British Pound while losing power to the Euro and Rand, figures from the Reserve Bank of Malawi (RBM) show.
According to the figures, on average, the local currency maintained its power to the US dollar at K822, gained value against the Pound to K1,250 from K1,273 in the preceding month while it lost value against the Euro trading at K1,170 from K1,157 and the Rand was trading at K66 from 64 in the previous month.
At the end of the month, the local unit was trading at K823 against the Dollar, K1,214 against the Pound, K1,031 against the Euro and K66 against the Rand.
However, market analysts believe the figures do not reflect the situation on the ground because, in reality, the local unit remains volatile.
Financial Market Dealers Association of Malawi (Fimda) Vice President Jim Kalua said in an interview yesterday that demand from importers was still growing despite continued scarcity of forex in the country.
Kalua added that the country’s hope lies in the tobacco market, which has just began.
“There is not much expected from tobacco and the current import cover is very low. Unfortunately, that problem is compounded by huge appetite for essential imports such as fuel, fertilizer, pharmaceuticals and others,” he said.
Market Analyst Cosmas Chigwe expressed similar sentiment, saying a true reflection of the exchange rate is what is being traded on the parallel market.
“Usually the black market rate is most of the times a true reflection of demand and supply on the market; so, if one is to look at the performance, the person can just quickly look at the black market,” he said.
The country is sitting on less than two months worth of imports, which is below the three-month internationally recommended period.
Justin Mkweu is a fast growing reporter who currently works with Times Group on the business desk.
He is however flexible as he also writes about current affairs and national issues.