- 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
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
"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
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.