Kwacha stable in first quarter of 2023
The local unit, the kwacha, was stable against the United States Dollar, but appreciated slightly against the Rand, the Pound and the Euro between January and March 2023, figures from the Reserve Bank of Malawi (RBM) have shown.
According average monthly exchange rates published by RBM, the Kwacha traded against the dollar at a middle rate of K1034.72 during the period under review.
The local unit was trading at K62.02 against the Rand in January 2023 and closed at K57.92 in March, representing a 6.61 percent appreciation.
The Kwacha appreciated by 0.65 percent against the Pound from K1,302 in January to K1292.48 in March and 0.57 percent to the Euro from K1,145.89 in January to K1,139.27 in March.
Financial Market Dealers Association President Leslie Fatch attributed the Kwacha footing to a relative weakening of the dollar against other currencies during the period.
He said when the dollar strengthens, the Euro to dollar rate goes down and similarly the Pound.
Fatch added that when the dollar to Rand rate goes up, the Kwacha appreciates against these currencies.
“The stability of the Kwacha against the dollar may have to be explained using other factors, notably demand and supply but most importantly, the pricing mechanism we have in our economy.
“With the dollar gaining against other currencies in the first quarter, it meant the dollar to Kwacha rate was supposed to depreciate, which was not the case in the period under review.
“Considering that we are operating at the mercy of movements in international financial markets and economies, the appreciation of Kwacha is a result of other markets responding to economic fundamentals, hence we may not have much to do to improve or sustain the aforementioned levels,” Fatch said.
He said the country needs to intensify effort towards forex generation if the Kwacha is to gain momentum.
“We need to improve the supply of forex by diversifying forex earning activities to reduce the pressure on tobacco. In addition, we need to ensure that we are repatriating the value for all exports.