The country’s currency, Kwacha, this week registered positive trends when it appreciated against major foreign currencies especially the United States dollar.
Malawi Kwacha has been largely stable for the past one year or so despite the country’s inflation going down to a single digit.
According to the Reserve Bank of Malawi’s (RBM) Financial Market Development, Kwacha appreciated from around K734 to a dollar to K730 this week.
RBM spokesperson, Mbane Ngwira told the local media that the slight appreciation is just one of those normal movements that occur from time to time largely due to market dynamics.
“The bigger picture is that the central bank is confident that at the close of this year and at least into the foreseeable future, the country is not likely to experience the usual seasonal lean period in terms of foreign exchange availability, thereby cementing the current stability of the exchange rate,” explained Ngwira.
Usually, Malawi experiences significant seasonal volatility in its foreign exchange inflows with earnings from tobacco exports concentrated during the April to August period. However, the exchange rate outlook this year is far much better than last year.
Economic statistician, Alick Nyasulu said the appreciation of Kwacha against the dollar means there were some donor fund inflows and proper management of the kwacha by the RBM which has so far been achieved.
Nyasulu expects, in the short-term, fluctuations of the currency but maintained that Kwacha will largely remain stable.
He said: “The key thing to this success is managing market expectations, and so far, it seems to work. On the other side of the fence, questions remain that is the stability of the currency and other economic indicators of any benefit to the Malawian household?”
Catholic University of Malawi economics lecturer, Hopkins Kabaghe expects a continued stabilization of the kwacha on the back of abundant maize harvest.
“I see the kwacha appreciating more as we sell more maize to other countries since the maize will be bringing more foreign exchange into our economy,” he said.
According to RBM, this is the longest period the Kwacha has been stable, bringing certainty on the market.NE