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Kwacha now trading at k568/$

The Malawi kwacha is sliding again, despite the central bank’s recent efforts to buttress the currency.

It seems, the kwacha could not hold anymore as from last week the unit seem to be back on a sliding path against major trading currencies, especially the dollar weeks after it retained a steady gain from a low of K565 to a dollar, as a market developments report by the Reserve Bank of Malawi (RBM) indicates.money-1

The local unit, according to the report, was trading at around K566 against the dollar on the foreign exchange market from K549, a situation which some experts attributed to the declining demand for foreign currency due to new levels of working capital.

As of yesterday, the unit had taken a further battering to settle at K568, according to Authorised Dealer Banks (ADBs) daily exchange rates.

In its financial market development report, RBM said the local unit depreciated against the dollar, British pound, euro and South African rand.

The report cites that as at last week, traded volume on the interbank market dropped to K4.60 billion compared to K12.07 billion recorded during the preceding day.

While on the parallel market in Blantyre, traders took advantage of the weak kwacha to sell it at about K580.

As Christmas festivities approach, many Malawians should be worried about their spending power being eroded by the weak kwacha, an economist told Business News.

Even economics professor at University of Malawi’s (Unima) Chancellor College, Ben Kaluwa, in an interview on Monday expressed frustration at the current downward trend of the kwacha.

He said unless Malawi gets a robust economy and sound export base, the country will continue to experience “unsteady and weak kwacha”.

He said: “Malawi has largely depended on the tobacco as its main export, but it is time we ought to find other alternatives to diversify our exports if we are to boost our economy and attain a strong unit.”

Depreciation of kwacha is not an isolated case. Other currencies in the region such as the Zambian kwacha and South African rand have all ceded power on the US dollar recent gains.

President Peter Mutharika, in a recent interview with Voice of America (VoA), said while government was keenly observing the depreciation of the kwacha, it is hoping the unit will in the long-run find its true value.

Mutharika believes the kwacha weakened by a feeble export base concentrated by a few commodities such as tobacco, tea sugar and coffee.

Currently, the RBM report said gross official reserves have also declined during the week ending October 23 compared to the preceding week highlighting that as of last week the gross official reserves stood at $663.19 million in the 3.18 months of imports. n

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