Malawi devalues currency by 48%

2012-05-07 13:11

Johannesburg - Malawi's central bank devalued the country's currency by about 48% on Monday, in line with a demand by the International Monetary Fund (IMF).

As per the new exchange rate, 250 kwacha would be worth $1 on the official market. Last week, 168 kwacha bought a US greenback. The new price is closer to the black market rate.

"Following this devaluation, the kwacha is now fully liberalised," Charles Chuka, the head of the Reserve Bank, said in a statement made available to local media.

The central bank had warned business over the weekend that it would be taking the move.

The IMF has argued for about a year that the currency was overvalued and hurting the Malawian economy.

Former president Bingu Wa Mutharika rejected the IMF demand, which was central to a proposed $79m loans package desperately needed by the impoverished southern African nation.

However, Mutharika died in office last month and was replaced by Joyce Banda, who has signalled her desire to reform Malawi's ailing economy.

Banda indicated in recent weeks that she was in favour of the devaluation, hoping it will help bring back key international donors that her predecessor chased away through a mix of domestic authoritarianism and objection to foreign advice.

Malawi, a landlocked nation in southern Africa, is ranked as one of the least developed nations in the world. Foreign aid made up about 40% of the government budget. Even more international funds went to development projects in the country.

  • Omo - 2012-05-07 13:41

    And Africa continues to get r@ped by the west with the help of senseless Africans of course.

      AnthonyfromAfrica - 2012-05-07 14:09

      Joyce Banda has only been President for two weeks. Give her two years, and let's than see if her country is better off, and the average Malawian's standard of living is improving! Unfortunatelly, your anti Western thoughts, will NEVER accept that !!

      Christo - 2012-05-07 14:13

      Exactly, Anthony. This woman will save that country. She's doing a great job so far and I'm sure the economy will show her efforts soon and so will the people notice it.

      Kobus - 2012-05-07 14:24

      Omo, go wash yourself in cold water and wake up!

      Gladstone - 2012-05-07 15:29

      @Omo, this time the Americans is conquering and colonising this African Continent with crazy leaders. Now Malawi is depending on foreighn funding, they even decided to devalue their currency. Its such a Shame!

      spartanx93 - 2012-05-08 08:13

      @Omo - Africa already r@pes itself.

  • michael.falatsi - 2012-05-07 14:59

    SA must learn a thing or two,we must also devalue the rand to increase expots and create sume much neede jobs.currently the bledy rand it too strong and not helping at all

      Stuart - 2012-05-07 15:09

      @michael.falatsi Fine, devalue the rand, your pay packet will stay the same and you will be paying R30 per litre for petrol, double for anything imported (clothes, food) few extra jobs, much extra hardship for the masses.

  • Freddie - 2012-05-07 15:03

    Omo you ignorant bigot. Joyce Banda is the best thing to happen to Malawi. Mutharika was swiftly undoing all progress achieved over the past five years or so. His blind stubbornness had driven away all foreign aid, in a country where aid made up half of the GDP. I do business in Malawi and deal with the government there, we were on the verge of shutting down the Malawi operation and laying off all the staff, Mutharika's death and Banda's proactive government has caused us to pause and give them another chance. I wish her and all her people all the best.

  • Gladstone - 2012-05-07 15:19

    Truth hurts. The colonel was killed because of not accepting being the puppet of the west. Now this woman devalues Kwacha by more 48%. What did you expect from another Banda?

  • sylvester.kasawala - 2012-05-07 16:38

    Every report on News24 about Malawi has this phrase 'the impoverished country'. Mr Editor, why do you keep on reminding us of something we already know? I hate this. Just talk about devaluation.

  • Wedson - 2012-05-10 15:20

    South Africa do what malawi did that is going help A lot RAnd is strong for nothing people are lieving like in Somalia while our is strong.

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