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  • Christine Chumbler
    Malawi Kwacha Weakening Against The US Dollar Panafrican News Agency November 2, 1999 Blantyre - Malawi s currency, the kwacha, has been weakening against the
    Message 1 of 1 , Nov 4, 1999
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      Malawi Kwacha Weakening Against The US Dollar

      Panafrican News Agency
      November 2, 1999

      Blantyre - Malawi's currency, the kwacha, has been weakening against the US
      dollar for the past one month, prompting fears of another devaluation.

      The currency, since its loss of 65 percentage points in August, has been selling
      at 42 to the dollar, and has been weakening slightly but steadily.

      At the beginning of business Monday, most commercial banks were quoting the
      kwacha at 45.9 to the American dollar, representing a depreciation of about 4
      percent.

      But economists are playing down the possible crash, saying the kwacha is
      responding to normal global economic trends.

      Fred Kanjo, head of economics at the Commercial Bank of Malawi, said this only
      shows that the demand of foreign currency is increasing.

      He added that normally the foreign exchange market in Malawi goes through
      what he termed as a "lean period" after the close of tobacco market.

      "Now that there is less forex on the market you need more kwacha to buy the
      dollar, it's the simple economics of demand and supply," he said, describing the
      fluctuation in the external value as normal.

      Economics Association of Malawi president Maxwell Mkwezalamba agreed with
      Kanjo, saying the fluctuation is all about the lean period following the close of the
      tobacco market.

      "With the closure of the tobacco season forex supply dries up thereby pushing
      the value of the dollar. This doesn't mean we are in a hopeless situation," he
      added.

      The country's central bank, the Reserve Bank of Malawi, is also of the same
      view, with its general manager for Economic Services, Charles Chuka, saying
      there is no reason for Malawians to be alarmed as the bank's foreign reserves are
      good enough to cover about five months.

      "We have enough reserves to support the kwacha; the movement in the currency
      should not be viewed negatively," he said.

      But the official upbeat assessment of the situation notwithstanding, ordinary
      Malawians are panicking, with some merchants already hoarding their supplies in
      anticipation of another crash.

      This fear is further enhanced by the recent increase in the price of fuel that has
      caused several commodity prices to rise.
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