Malawians are to embrace tough times following the depreciation of the kwacha .The kwacha is trading at about k530 to dollar in some of the foreign exchange bureaus.
The fall of the local currency has come after a few months of stability.
The last time the local unit sharply lost its value against the dollar was in November last year when it hit K520 in some authorised dealer banks (ADBs).
But this time, the depreciation of the kwacha comes at the height of the tobacco sales which have already raked in $204.38 million ($102.2 billion) in 13 weeks of sales, up from $183.45 million during the same period last year.
Economists said this largely reflects sustained uncertainty about whether donor aid to one of Africa’s poorest countries will resume. Many donors had suspended support in the wake of last year’s “Cashgate” scandal, in which more than $30 million was looted from government coffers, the British auditing firm Baker Tilly concluded in a report released last month.
Economic experts have projected that the fall of the kwacha will result into the rising price of goods and service. And this will put pressure of workers asking for higher wages.
One of the Prominent Malawi economist Thomas Munthali said he was troubled by the rate of decline, saying there was a strong chance of a “very high inflation level that would erode the purchasing power.
“And at the same time,” he said, “the industry will be faced with tough times because the interest rates are likely to go up.”