The Reserve Bank of Malawi (RBM) has ruled out any plans to devalue the Malawi Kwacha, with Governor McDonald Mafuta Mwale saying the local currency is beginning to stabilise and show early signs of recovery following the change of administration and improving foreign exchange reserves.
Speaking during a media briefing in Lilongwe on the current forex situation, Mwale said the central bank is confident that ongoing reforms by the new administration will help restore market confidence and ease pressure on the local currency.
“There is no devaluation coming,” Mwale assured. “We are optimistic that the forex situation will continue to improve as the new Minister of Finance engages with international partners and development institutions to unlock critical inflows.”
Mwale’s remarks come after Malawi experienced one of its worst foreign exchange crises during the last three years of the Lazarus Chakwera administration, which was voted out of office on September 16.
The shortage of foreign currency under the previous government led to commercial banks rationing forex and restricting access for individuals and businesses alike. It also led to the worst crises on shortage of things including fuel that Malawi has seen in recent memory.
As a result, the black market flourished, with the Kwacha trading at over 200 percent higher on the parallel market than the official rate. For instance, while the official exchange rate hovered around MK1,800 per US dollar, the same dollar was fetching over MK5,000 on the black market.
Since the election, however, there have been signs of gradual recovery. Black market rates have fallen to around MK3,500 per US dollar, and the RBM says it has noted a modest rebound in official reserves. This, the bank said, has been bolstered by improved export receipts and renewed confidence from international partners.
Mwale emphasized that the central bank is closely monitoring foreign exchange trading and warned that stern action will be taken against financial institutions or entities engaging in parallel market dealings.
“We are aware of some financial institutions that continue to participate in black market trading. Let me make it clear: the law will take its course on anyone found to be operating outside the formal financial system,” he warned.
The RBM governor reiterated that the Bank’s focus remains on strengthening foreign exchange management, restoring public confidence, and supporting the broader goal of macroeconomic stability.
This development comes shortly after the ushering in of the new administration Peter Mutharika, a shift that observers say could mark the beginning of renewed investor confidence in Malawi’s fiscal management and economic direction.
Malawians voted out Lazarus Chakwera on 16 September, ushering in Peter Mutharika in a landmark election that signalled a public demand for economic stability and stronger governance.
