The Reserve Bank of Malawi (RBM) says only three out of eight banks participated in the foreign exchange auction last week and the results cannot be used to determine the official exchange rate of Malawi Kwacha.
The Central Bank last week announced that Authorized Dealer Banks (ADBs) will be submitting bids to sell foreign exchange to RBM at rates determined by each ADB and these auctions will facilitate the discovery of a prevailing exchange rate for the Malawi Kwacha against major currencies and thereby promote transparency in the determination of the exchange rate.
However, in a statement yesterday, RBM Governor Wilson Banda said only three out of eight ADBs participated in the auction held on Friday last week.
“Consequently, these results cannot be used to determine the official exchange rate as they may not be representative of the sentiments of the entire banking system,” said Banda.
He added that the bank will engage all commercial banks in preparation for the next auction.
The introduction of the foreign exchange auctions has been condemned by some experts who have argued that RBM wants devalue the Kwacha and blame commercial banks.
Former RBM Governor Dalitso Kabambe also described the move as a step in a wrong direction.
“It is the lack of financial prudence and sound economic principles that has forced this administration to resort to this measure,” he said. “As it is we can simply say that the Kwacha is being devalued silently with the government opting to heap the blame on the private banks.”
According to RBM statistics, the Kwacha is selling at K1036.2485 per one United States Dollar and K62.4710 per one South African Rand.
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