{"id":42454,"date":"2023-03-10T22:34:46","date_gmt":"2023-03-10T22:34:46","guid":{"rendered":"https:\/\/www.africa-press.net\/malawi\/all-news\/chakweras-doomed-canaan-as-malawi-kwacha-auctioned-for-true-value"},"modified":"2023-03-10T23:16:27","modified_gmt":"2023-03-10T23:16:27","slug":"chakweras-doomed-canaan-as-malawi-kwacha-auctioned-for-true-value","status":"publish","type":"post","link":"https:\/\/www.africa-press.net\/malawi\/all-news\/chakweras-doomed-canaan-as-malawi-kwacha-auctioned-for-true-value","title":{"rendered":"Chakwera\u2019s doomed Canaan as Malawi kwacha auctioned for true value"},"content":{"rendered":"

Africa-Press – Malawi. <\/strong><\/span>President Lazarus Chakwera Tonse Alliance government is in disarray failing to fix ail economy that the local currency Malawi Kwacha has lost grip on the market.<\/p>\n

This is testified in the decision Reserve Bank of Malawi (RBM) introducing forex auctions as a way of determining the true value of the local currency.<\/p>\n

A forex auction is a system in which the central bank regularly sells a given amount of foreign exchange through a bidding process and buys foreign exchange in the intervening periods at the previous auction-determined rate.<\/p>\n

Through the forex auctions, which will be held once every month, individual commercial banks will be submitting the price at which the kwacha should be bought or sold during that month and the average price will be adopted by the monetary authorities as the ruling exchange rate for that month.<\/p>\n

The introduction of the forex auctions come at a time economists had argued that the local unit, the kwacha, was overvalued with the official rate seen at around MK1031 to the dollar when the parallel market was trading the dollar at around MK1450.<\/p>\n

Before the introduction of the forex auctions, RBM could take the administrative responsibility of devaluing the kwacha but with the introduction, the depreciation or appreciation of the kwacha will sorely be determined by the market forces of demand and supply.<\/p>\n

However, the development has not gone well with economic experts including former Finance Minister Joseph Mwanamveka who has trashed the decision. Mwanamveka writes,…<\/p>\n

This press statement that has been made by the Reserve Bank of Malawi is a wrong decision as it will lead to further massive devaluation or loss of value for the Malawi Kwacha. This policy regime was pursued by the Reserve Bank of Malawi in early 1990s up to 1995 during the Structural Adjustment Programmes (SAPs). I was at the Reserve Bank of Malawi at that time and was working in Financial Market Operations Department and was part of the team managing this policy regime. It failed miserably and was later abandoned.<\/p>\n

At that time, the auctions system of foreign exchange was meant to improve the country\u2019s export competitiveness, provide efficient foreign exchange allocation to banks, maintain price stability, dampen speculative attacks on the Malawi Kwacha and restore investor and donor confidence. All these objectives were never achieved, and, in fact, the opposite was achieved.<\/p>\n

After introducing this system in January 1994, the Malawi Kwacha devalued by over 300 percent by end of February 1994. Inflation and interest rates increased to unmanageable levels and people\u2019s disposable incomes declined heavily thereby making Malawians poorer than they were before. I am therefore dismayed or astounded that the Reserve Bank of Malawi wants to revert to such failed foreign exchange policy regime. What a surprise!<\/p>\n

In fact, there are many studies that were done by Reserve Bank of Malawi and one of them was entitled \u201cThe efficacy of foreign exchange intervention in Malawi\u201d. This can be accessed on the internet. The studies clearly demonstrated that auction system as a foreign exchange policy can\u2019t work in Malawi. The same has not worked in almost all developing countries including those in Africa.<\/p>\n

It can therefore be concluded that if the Reserve Bank maintains to pursue this foreign exchange policy regime again, Malawians should expect massive and unprecedented devaluation or loss of value of the Malawi Kwacha, unprecedented increase in inflation and interest rates which in turn will lead to unprecedented increase in commodity prices, loss of value of Peoples\u2019s salaries and wages, massive poverty and suffering of Malawians.<\/p>\n

For More News And Analysis About Malawi<\/a> Follow Africa-Press<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Africa-Press – Malawi. President Lazarus Chakwera Tonse Alliance government is in disarray failing to fix ail economy that the local currency Malawi Kwacha has lost grip on the market. This is testified in the decision Reserve Bank of Malawi (RBM) introducing forex auctions as a way of determining the true value of the local currency. […]<\/p>\n","protected":false},"author":84,"featured_media":42453,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2,5],"tags":[233,371,234],"class_list":["post-42454","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-all-news","category-economy","tag-africa-press","tag-africa-press-malawi","tag-malawi"],"yoast_head":"\nChakwera\u2019s doomed Canaan as Malawi kwacha auctioned for true value - Malawi<\/title>\n<meta name=\"description\" content=\"President Lazarus Chakwera Tonse Alliance government is in disarray failing to fix ail economy that the local currency M ...\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.africa-press.net\/malawi\/all-news\/chakweras-doomed-canaan-as-malawi-kwacha-auctioned-for-true-value\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Chakwera\u2019s doomed Canaan as Malawi kwacha auctioned for true value\" \/>\n<meta property=\"og:description\" content=\"President Lazarus Chakwera Tonse Alliance government is in disarray failing to fix ail economy that the local currency M ...\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.africa-press.net\/malawi\/all-news\/chakweras-doomed-canaan-as-malawi-kwacha-auctioned-for-true-value\" \/>\n<meta property=\"og:site_name\" content=\"Malawi\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/AfricaPressTunisiaa\" \/>\n<meta property=\"article:published_time\" content=\"2023-03-10T22:34:46+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2023-03-10T23:16:27+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/static.africa-press.net\/malawi\/sites\/36\/2023\/03\/postQueueImg_1678475225.70.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"720\" \/>\n\t<meta property=\"og:image:height\" content=\"720\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"cfeditoren\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"cfeditoren\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/www.africa-press.net\/malawi\/all-news\/chakweras-doomed-canaan-as-malawi-kwacha-auctioned-for-true-value#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.africa-press.net\/malawi\/all-news\/chakweras-doomed-canaan-as-malawi-kwacha-auctioned-for-true-value\"},\"author\":{\"name\":\"cfeditoren\",\"@id\":\"https:\/\/www.africa-press.net\/malawi\/#\/schema\/person\/068c7ab4e9634ae78ec5d54ec46598bb\"},\"headline\":\"Chakwera\u2019s doomed Canaan as Malawi kwacha auctioned for true value\",\"datePublished\":\"2023-03-10T22:34:46+00:00\",\"dateModified\":\"2023-03-10T23:16:27+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.africa-press.net\/malawi\/all-news\/chakweras-doomed-canaan-as-malawi-kwacha-auctioned-for-true-value\"},\"wordCount\":610,\"commentCount\":0,\"image\":{\"@id\":\"https:\/\/www.africa-press.net\/malawi\/all-news\/chakweras-doomed-canaan-as-malawi-kwacha-auctioned-for-true-value#primaryimage\"},\"thumbnailUrl\":\"https:\/\/static.africa-press.net\/malawi\/sites\/36\/2023\/03\/postQueueImg_1678475225.70.jpg\",\"keywords\":[\"Africa Press\",\"Africa Press-Malawi\",\"Malawi\"],\"articleSection\":[\"all news\",\"economy\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/www.africa-press.net\/malawi\/all-news\/chakweras-doomed-canaan-as-malawi-kwacha-auctioned-for-true-value#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.africa-press.net\/malawi\/all-news\/chakweras-doomed-canaan-as-malawi-kwacha-auctioned-for-true-value\",\"url\":\"https:\/\/www.africa-press.net\/malawi\/all-news\/chakweras-doomed-canaan-as-malawi-kwacha-auctioned-for-true-value\",\"name\":\"Chakwera\u2019s doomed Canaan as Malawi kwacha auctioned for true value - 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