The Reserve Bank of Malawi (RBM) has devalued the Malawi Kwacha from K1,180 to K1,700 against the United Stated dollar.
RBM Governor Wilson Banda has confirmed the 44 percent devaluation of the Kwacha which is effective midnight.
According to Banda, this follows the supply-demand imbalances which remain on the market despite previous adjustments of the exchange rate through the auction system.
He added that arbitrage opportunities have resurfaced in the market due to mismatch in the exchange in the cash and telegraphic transfer markets.
“Spot checks on some market players indicate that the market is able to clear bills at this rate,” said Banda.
The devaluation comes as Malawi is wooing the International Monetary Fund to approve a new Extended Credit Facility with the country. IMF executive board meets next week to decide the country’s fate.
The announcement by RBM also comes hours after President Lazarus Chakwera left the country for Saudi Arabia despite the cancellation of the Arab-Africa summit which was set to attend. Chakwera has defended the trip saying he is going to attend the Saudi-Africa summit.
It is expected that following the devaluation of the Kwacha, prices of various goods and services, which were already high, will continue to rise.
