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RBM exchange rate falls to K388

The official buying exchange rate as announced by the Reserve Bank of Malawi (RBM) has gone down to K388 to a US dollar.

RBM spokesperson Mbane Ngwira said in an interview the exchange rates are determined by the market forces and the Central Bank take them as they come to guide the financial market.

Kubalasa: Economy needs to grow and mature
Kubalasa: Economy needs to grow and mature

Mbane said: “The exchange rates are market determined, we take and use them as they come.”

The RBM posted on its website last week that the official buying rate of a $1 was K388, down from around K460 a few months ago.

Financial experts have predicted that the local currency would continue to gain strength against the dollar and is likely to trade at K350 to a dollar in coming weeks to come and there are prospects that fuel prices may continue going down based on automatic fuel price system.

Malawi Economic Justice Network (Mejn) executive director Dalitso Kubalasa said in a response to a questionnaire that it is his organisation’s understanding that the automatic fuel pricing mechanism in itself ideally allows for the fuel price adjustments when conditions satisfy.

Kubalasa said: “Since Malawi is a net price taker to the prevailing world prices of oil, this also largely depend on the magnitude of the kwacha appreciation against other currencies, among the major variables.

“This probably explains why at times, all things being equal, when the kwacha has depreciated, the fuel prices have actually remained constant, except for a few instances where there were fuel price reductions.”

He said Malawians can still expect some moderate price decreases, especially as the kwacha is expected to continue gaining strength, courtesy of the tobacco season and sales underway.

He said there have been periods of some kwacha depreciation, that haven’t had spontaneous fuel price hikes; just as there have also been some periods of kwacha appreciation without spontaneous fuel price reduction.

Kubalasa said: “It is important to ensure that much as we would want fuel prices to decline, it must be done so as a result of satisfying the prevailing economic conditions and market forces. This economy needs to grow and mature.”

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