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‘Kwacha to firm further’

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One of the country’s financial market analysts says he sees the kwacha trading below K700 to the United States dollar by July this year.

The analyst, Martin Nsamala, who is also Golden Forex Bureau Director, said prospects are strong that the kwacha will strengthen against the dollar following the good start to the tobacco selling season and tight monetary policy set by the Reserve Bank of Malawi.

On Friday, the kwacha was trading at around K729 to the dollar in authorized dealer banks while bureaus were selling the green buck at an average price of K755.

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As at May 10, 2017, gross official reserves stood at $517.83 million or 2.74 months of imports.

As at the end of tobacco sales on Thursday, the country had realised a total of $33.4 million with 19,336,342 kilogrammes of the green gold sold an average price of $1.73 per kilogramme.

Nsamala said with the tobacco selling season yet to gather steam, chances are high that the local currency will gain considerable ground against the green buck.

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“If prices continue to remain good at the auction floors, the country will realise more dollars from tobacco sales,” Nsamala said.

He added that the tight liquidity prevailing in the market at the moment could also help ease pressure on the dollar, thereby allowing the kwacha to appreciate.

In the short term, Nsamala observed that this is going to be very beneficial for the farmers if they plan well on the fertilizer and farm inputs.

“If the dollar is below K700 then the farm inputs will be cheaper and this will help farmers to further make profits as the crop prices have been low due to bumper harvests.

“We should all pray for good rains this year as well and then the economy will have fully recovered by 2018,” Nsamala said.

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