Reserves up, signal economic resilience
Malawi’s gross foreign exchange reserves, or reserve assets held by the central bank in foreign currencies, have gone up to 3.72 months of imports as of this week.
The improvements in the forex position are in sharp contrast to expectations of volatility in the economy as the country moves into a lean period.
Earlier, Reserve Bank of Malawi (RBM) spokesperson, Mbane Ngwira, expressed optimism of a turnaround in the seasonal volatility of the local currency this year.
“Malawi is not likely to experience the usual seasonal lean period in terms of foreign exchange availability.
“It is also encouraging that these higher [levels of] reserves are being achieved although the tobacco market performed dismally,” Ngwira said.
He said this is a clear indication that the share or importance of tobacco as a foreign exchange earner is being overtaken by other imports.
Some economic commentators have also described the development as good news for the economy as any shocks resulting from lower tobacco proceeds are being absorbed with little or no impact on the foreign exchange position.
Now at $777.41 million, the reserves are higher than the $726.21 million (3.47 months of imports) recorded mid this month.
RBM daily money market report for October 20 further shows that the official reserves closed at $749.75 million (3.59 months of imports) on October 13 compared to $726.79 million ( 3.48 months of imports) recorded on October 6.
