The Reserve Bank of Malawi (RBM) Governor Charles Chuka says he is pleased with the prevailing kwacha exchange rate against other major foreign reference currencies, arguing the local unit has corrected itself to reflect prevailing economic dynamics.
Chuka told Business News on Friday at Sunbird Nkopola in Mangochi when asked to wrap-up the outcome of a day-long symposium on monetary and exchange rate that the central bank organised.
The local currency has stabilised at around K380 to the dollar for some months now.
“The exchange rate has corrected itself and we are happy as a central bank with the exchange at the moment. Malawi is now ready to join the rest of all Sadc member States in making sure that inflation is reduced if we continue with our prudence in managing the exchange rate and other monetary policy instruments,” he said.
Chuka said the economy is also sitting on gross official reserves equivalent of 2.5 months of import cover which he said is a record high in the past eight years.
He said such an accumulation of more foreign reserves is historical, coming at a time Malawi’s major donors have suspended budget support, which is one other key of foreign exchange in Malawi, and also at a time the economy is reeling from Cashgate.
“What has happened here in Malawi this year is shocking because we have accumulated enough foreign reserves when on one hand donors have withdrawn budget aid and that Cashgate has strained the economy, but with the strength of the kwacha being on a very good note,” said the governor.
He said such strides reflect the fact that RBM is executing its monetary policy well in collaboration with other players in the economy.
But Chuka said RBM is aware of the need to change the prospects of the economy and also grow the economy fast enough as envisioned by the new government.
He said he was excited with the way experts shared their views during the symposium on monetary policy and also on RBM’s role in the economy.
The conference was attended by a wide range of stakeholders such as the academia, government, financial sector, business community and media to obtain a deeper appreciation of the practical side of monetary policy and the determination of the exchange rate.