Malawi devalues kwacha by 25% as forex runs low
The authorities in Malawi have announced a 25% devaluation of the local currency, the kwacha, starting on Friday.
The announcement has come when Malawi is in the middle of negotiations with the International Monetary Fund (IMF) to determine the details of a new financial assistance programme.
To secure backing, the government has been asked to make adjustments to its economic policies, but central bank chief Wilson Banda says the decision to devalue the local currency has not been forced on the country by the international lending institution.
Mr Banda told the media in the southern city of Blantyre that the local currency had been devalued to allow the market to determine the exchange rate.
“It’s a decision we have taken as the central bank looking at the economic trends. With or without the IMF we were going to do it,” Mr Banda said.
A devaluation means that anything imported becomes more expensive and there are fears that commodity prices will rise.
Exports, on the other hand, become cheaper.
