Mixed fortunes for kwacha
The Malawi kwacha depicted mixed performance against currencies of its major trading partners in November 2021, depreciating by 0.2 percent against the United States dollar to trade at K822.88, published Reserve Bank of Malawi (RBM) have shown.
In its recent monthly economic review, RBM said against the British pound, the kwacha registered a marginal appreciation of 0.6 percent and traded at K1 194.23 per pound on account of a weakening pound as the Omicron Covid-variant threatened economic prospects.
However, against the euro, the kwacha depreciated by 5.9 percent and traded at K1 099.91 during the review period, as fears over Omicron moderated and markets responded positively.
Reads the report in part: “Against Asian currencies, the local currency depreciated by 0.5 percent and 0.4 percent against the Japanese yen and Chinese yuan, respectively, and traded at K7.22 per yen and K128.13 per yuan. The outturn was explained by the strengthening of the yen and yuan, following a rebound in global risk appetite, and increased consumer confidence in both economies.
“Meanwhile, the kwacha appreciated by 0.3 percent against the Indian rupee, and traded at K10.87 per rupee as at end November 2021.”
Within the Southern African Development Community, the local currency appreciated against both the South African rand and the Zambian kwacha by 3.1 percent and traded at K57.21 per rand and K45.92 per Zambian kwacha.
“The rand depreciated as a result of capital outflow, following an unexpected hike in US interest rates.
“On the other hand, the Zambian kwacha depreciated on account of increased demand for foreign exchange against limited supply,” said RBM in the report.
Meanwhile, the Economist Intelligence Unit (EIU) has projected that the kwacha may depreciate further by about three percent against other trading currencies this year through 2026 largely due to widening current account deficit.
The forecast by EIU comes at a time the kwacha has continued to face pressure as it has depreciated throughout the just ended year to date.
According to the EIU, the average value of the kwacha is therefore expected to weaken from the current K823 to a dollar to K847.69 to a dollar.
Recently, RBM Governor Wilson Banda said the central bank is currently looking at arranging facilities with regional and international banks to provide the country with short liquidity in foreign currency thus stabilising the kwacha.
