RBM forex auction raises $350,000

Fiscal authorities are revealing that the Reserve Bank of Malawi’s foreign exchange auction last week managed to raise some 350,000 US
dollars.

A statement by RBM Governor Wilson Banda confirms that the amount was part of 450,000 dollars that was offered by all eight dealer banks.

The statement further discloses that the highest rate during the auction was 1,139 kwacha 87 tambala per dollar, but the bank’s highest accepted rate was 1,075 kwacha.

“We are pleased to report that during this auction, all Authorised Dealer Banks participated.

“The foreign exchange auctions will facilitate the discovery of a prevailing market clearing price of the Malawi Kwacha against the United States Dollar and other major currencies.

“The Bank believes that the auctions are a fair mechanism of implementing an exchange rate regime which reflects market fundamentals,” reads part of the statement.

_{Mwanamvekha ; fears the auctions will trigger another devaluation}

Following the vending, the local unit slumped by two percent with the central bank stressing that the process will help facilitate the discovery of the kwacha’s real market value against major currencies.

In a recent interview, however, former finance minister Joseph Mwanamvekha warned that the auctions will only trigger devaluation of the currency without solving the prevailing acute forex situation.

“This process will only result in the devaluing of the kwacha ….but just as we saw 25 percent devaluation did not help to solve forex challenges last year, actually it only pushed commodity prices up and let consumers starve.

“Government or finance ministry through Reserve Bank must find ways of getting forex and give the commercial banks ….only this could ensure steady supply of forex and stability of the kwacha,” Mwananvekha said.