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Reserve Bank of Malawi trashes foreign exchange auction bids

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Leslie Fatch

The Kwacha will remain stable, at least for the rest of January, following a decision by the Reserve Bank of Malawi (RBM) to trash bids authorised dealer banks (ADBs) submitted during a forex auction held last Friday.

But analysts have faulted rates at which the ADBs which participated in the auction quoted the dollar. RBM for not publishing the

The central bank wants to use forex auctions to facilitate the discovery of a prevailing market clearing exchange rate for the Kwacha against major currencies, thereby promoting transparency in the determination of the exchange rate.

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In a statement Tuesday afternoon, RBM Governor Wilson Banda said only three out of eight ADBs took part in the forex auction on Friday.

“The Reserve Bank of Malawi wishes to inform the general public that during the pilot Foreign Exchange Auction held on Friday, 13 January 2023, only three of the eight authorised dealer banks (ADBs) participated.

“Consequently, these results cannot be used to determine the official exchange rate as they may not be representative of the sentiments of the entire banking system,” Banda said.

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Commenting on the development Tuesday, Financial Market Dealers Association President Leslie Fatch said the dealers would wait for RBM’s direction on the matter.

Forex-broke Malawi needs about $250 million every month to meet its import needs.

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