Professor of applied economics and director of the Troubled Currencies Project in the United States, Steve Hanke, has described the Malawi Kwacha as a “junk currency”, saying it has depreciated against the United States dollar by over 40 percent since 2020.
Hanke who is a professor at the Johns Hopkins University in the United States, every week publishes Hanke’s currency watchlist, a group of currencies that have depreciated by at least 20% against the dollar since January 2020.
This week, the Malawi Kwacha is 10th on the list having depreciated by 40.45% since 2020.
“The Malawian kwacha has depreciated against the USD by 40.45% since Jan 2020. The kwacha is yet another central bank junk currency,” says Hanke in a Twitter post early this morning.
#Malawi is in 10th place in this week's Hanke’s #CurrencyWatchlist. The Malawian kwacha has depreciated against the USD by 40.45% since Jan 2020. The kwacha is yet another central bank junk currency. pic.twitter.com/Uq8xypB9Mn
— Steve Hanke (@steve_hanke) June 26, 2022
Malawi Government recently devalued the Kwacha by 25 percent reportedly on advice from the International Monetary Fund. Government said the devaluation was implemented to deal with a shortage of foreign exchange on the market.
The devaluation has led to an increase in prices of basic commodity such as cooking oil, maize and recently fuel.
Hanke’s list has not come as a shock to Malawians who have said they already knew that the Kwacha is weak.
“Ainiake tikuziwa (people in Malawi already know about this),” said one twitter user.
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