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Foreign Exchange auction pegs kwacha at K1,751

The Malawi kwacha is exhibiting stability, maintaining its rate at K1,751 to the dollar, as indicated by latest foreign exchange auction results published by the Reserve Bank of Malawi (RBM).

According to the RBM figures, the local unit has retained its current position since November 2023 when the central bank implemented a 44 percent devaluation.

Foreign exchange is scarce in the country

RBM Governor Wilson Banda, in a press statement issued last week, said the kwacha will continue to trade at an average of K1,751 in Authorized Dealer Banks (ADBs).

He said the foreign exchange auction, held last Thursday, aimed at determining the prevailing market-clearing price of the Kwacha against the dollar and other major currencies.

Initiated in January last year, the foreign exchange auctions are designed to be periodic and are meant to facilitate the discovery of a prevailing market clearing exchange rate for the kwacha against major currencies.

During the auction held last week, the ADBs offered USD200,000.00 and RBM accepted the same amount.

Recently, the RBM also introduced operational adjustments in the foreign exchange market. These adjustments allow the local currency to float within a specified band, enabling market forces to determine its value based on demand and supply dynamics.

In a published circular, Governor Banda outlined that ADBs now have the liberty to engage in free negotiations of exchange rates for transactions with clients and among themselves, removing previous limitations.

Additionally, RBM disclosed a shift in foreign exchange auctions, from monthly to a bi-weekly, with sales occurring as needed to address disorderly market conditions.


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