Malawi’s central bank devalued the kwacha in a step that leaves the currency worth two-thirds less than it was at the start of the year.
The currency will be sold at auction at 1,700 with effect from Thursday, compared with 1,180.29 previously, the Reserve Bank of Malawi said in a statement. The 44% devaluation is the fifth this year, said Betchani Tchereni, an associate professor of economics at the Malawi University of Business and Applied Sciences.
The measure was taken to correct supply-demand imbalances and counter arbitrage opportunities that have arisen in the market, the central bank said. Spot checks also indicate that the market is able to clear import bills, it said.
“The Reserve Bank of Malawi will closely monitor developments in the market to avoid disorderly behaviour among market players that may cause excessive volatility,” Governor Wilson Banda said in the statement.
Malawi’s central bank has been conducting periodic sales to help determine a market exchange rate for the local currency. The kwacha started the year at 1,025.50 per dollar.