The kwacha hit K520 against the dollar in commercial banks on Tuesday, a loss of about 20 percent within two months, pointing to more pain for businesses and consumers.
Two months ago the kwacha was selling at K412 to the dollar, just before the closure of the tobacco marketing season in September this year, to about K488 on Monday, according to official figures provided by the Reserve Bank of Malawi (RBM).
However, indicative exchange rates provided by authorised dealer banks (ADB), where traders buy their forex, on Tuesday showed that the kwacha was selling between K502 and K520 to a dollar.
Small and Medium Enterprises Association (Smea) president James Chiutsi in a telephone interview on Tuesday said the loss of the kwacha is threatening small businesses.
“SMEs import small machinery and materials and due to the fall of the kwacha, we are failing to buy these and grow our businesses. We would like to ask government to do what it can to ensure that the kwacha stabilises,” said Chiutsi.
But although analysts have blamed the fall of the kwacha to uncertain donor inflows and a lean export base, the Malawi Confederation of Chambers of Commerce and Industry (MCCCI) has attributed it to bad policies by the central bank.
In a telephone interview on Monday, MCCCI president Newton Kambala said the business community struggles to access their foreign currency denominated accounts (FCDA) to meet their international obligations and hence would rather have their earnings from international operations stashed away from Malawi.
Citing his personal experiences, Kambala who is managing director for Mkaka Construction Company said there was an instance in which he was denied access to his FCDA to pay for costs of a project his company was implementing in Zimbabwe.
“I have a personal experience in which I could not access my FCDA and I was told by an official at the central bank to go and buy the forex on the street,” said Kambala.
He argued that if this would be loosened, it would encourage more forex remittances into the country and consequently increase forex supply.
But in a telephone interview on Monday, RBM spokesperson Mbane Ngwira said although they have liberalised the forex regime, they require proof before sending money for foreign payments, as an anti-money laundering measure.
“Sometimes people fail to send their forex due to lack of documentation,” said Ngwira.
The kwacha has been falling steeply while some analysts have blamed the tendency to poor remittances by exporters.
Earlier in October, the Malawi Revenue Authority (MRA), in a press statement signed by the its commissioner general Raphael Kamoto, said it is an offence to fail to account for export proceeds and the authority would take necessary enforcement measures to ensure that exporters comply with the Exchange Control Act and Customs and Excise Act.