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Banks bemoan forex shortage
By
Abel Mwanyungwe - 02-12-2002 |
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There is an acute shortage of foreign currency on the market, both National Bank of Malawi (NBM) and Commercial Bank of Malawi (CBM) confirmed on Monday.
The shortage, which is attributed to a number of factors, including the closure of the tobacco season and speculative behaviour by some market players, has forced the kwacha to lose substantial value against its major trading partners since November 4 this year.
The kwacha was trading K84.4 to the dollar on Monday, from about K80 to the dollar two weeks ago.
CBM Dealing Manager Webster Kaunga said in an interview there was general shortage of the forex and hoped that the Reserve Bank of Malawi (RBM) would intervene to liquidate the market with dollars.
He said this was generally a lean period since the tobacco selling season was closed in September.
Kaunga said the situation will remain so for two weeks or longer depending on how soon the central bank “would move in to bridge the gap”, adding that the shortage could force the kwacha to lose its value gradually.
Official RBM figures show that the import cover—the amount of foreign exchange to finance import—went down to 2.3 months as of Friday last week.
NBM Senior Dealer Wilson Mlauzi also said in an interview on Monday that while supply of forex was very low on the market due to the seasonal nature of the market, there are also speculative forces in play.
He said while it was a usually a lean period this time around, the situation is worse this year than it was last year.
“Last year, we were okay, we did not have such movements in the kwacha value.
Continental Discount House (CDH) Assistant Manager (Economics and Research) Harold Ngalawa said apart from the seasonality factor, the slow down in forex supply as a result of donors withholding aid has also contributed to the problem.
“Reserves are also dry because government is paying for maize import obligations which it cannot avoid. Even the inflows from tea dollars are not there to cushion the depreciation. But the worrisome development is speculation,” he said.
Ngalawa said the country would sit on a healthy and normal position if its gross foreign reserves does not go beyond the three-month import cover.
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