Import cover hits 3.83 months
Malawi’s gross foreign exchange reserves —a combination of official and private sector reserves— inched upwards to 3.83 months of import in March, recovering from the previous month’s fall.
According to Reserve Bank of Malawi’s (RBM) second Monetary Policy Report, the gross official reserves rose to $799.48 million (about K592 billion) at the end of March 2019.
In the prior month, the gross official reserves dropped to $754 million (about K558 billion) of imports from $673 million (about K498 billion) which is equivalent to 3.2 months of imports reported during the same period in 2018.
In recent months the RBM has maintained sound foreign exchange reserves position averaging above three months, a situation the bank attributed to the strength of the local unit, kwacha which remained broadly stable to the dollar at K738.79 as at end March 2019.
Authorities so far have attributed the good performance of the foreign reserves to fiscal discipline and efforts by the RBM to absorb excess liquidity from the banking system as well as maintenance of positive real interest rates.
Speaking previously with Business News, RBM spokesperson Mbane Ngwira said the bank is confident that at least into the foreseeable future, Malawi is not likely to experience the usual seasonal lean period in terms of foreign exchange, thereby cementing the current stability of the exchange rate.
Traditionally, Malawi experiences significant seasonal volatility in its foreign exchange inflows with earnings from tobacco exports concentrated during the April to August period.
Economic analyst Cosmas Chigwe casted no doubt on the stability of the kwacha going forward pointing that it is no longer the tobacco marketing season that propels the local unit.
