Malawi Kwacha Depreciates
Results of a foreign exchange auction hosted by the Reserve Bank of Malawi on June 19 have pushed the maximum selling price of USD1 to MWK1, 063.86 from MWK1, 036 effective Wednesday June 21st 2023.
RBM Governor Dr Wilson Banda, in a statement released Tuesday, said all dealer banks participated in the auction and reiterated that the results of auctions will determine the marketing clearing price of the Malawi Kwacha against the US dollar and other major currencies.
“As per the Bank’s communication from 12th January 2023 on foreign exchange auctions, these auctions will determine the market clearing price of the Malawi kwacha against the United States Dollar and other major currencies,” reads part of the statement.
“In this regard, please be advised that effective 21st June 2023 the maximum selling price shall be MWK1, 063.86 per USD1,” it added.
The statement has reiterated that all foreign currencies should be priced according to the 2019 guidelines for foreign exchange trading activities.
Commenting on the auction, the second this year, Bankers Association of Malawi Chief Executive Officer Lyness Nkungula, said forex auction is a new concept, and that is why banks were not sure about it earlier on, but reaching this far, they have now understood the idea.
Economic expert Gilbert Kachamba, while applauding RBM for successfully hosting the auction, says he is not surprised with the depreciation of the kwacha, saying it is a true reflection of the current situation on the market.
“The devaluation of the currency is a true reflection of what is happening on the market although it will push forward inflation,” said Kachamba.
During the first auction held in January this year, only three authorized dealer banks participated in the auction prompting RBM not to use the results to determine the official exchange rate as they could not reflect the thoughts of the entire banking system.