By Chikondi Lungu
Experts have said the local currency- Kwacha will continue depreciating for a long lane of time largely due to poor performance of the tobacco market among other factors.
This year’s tobacco market has been characterized as one of the worst in history and is expected to spill over to 2017, Malawi Punch understands.
As of this time, Malawi Kwacha is showing no signs of relenting, with latest figures showing the local unit depreciated against the US dollar by 8.01 percent in the first ten months of 2016 despite the tobacco market still being open.
According to an Economic Brief for October 2016 released by Nico Asset Managers shows the kwacha continued to depreciate as a result of low inflow of foreign currency which mostly comes in through tobacco market.
Late October this year, Kwacha was trading at K726.58 to the US dollar, representing 0.72 percent depreciation and it also fell by 1.73 percent to the South African rand to trade at K52.82.
Confirming the development, Auction holdings Limited (AHL) Group said unless there are improvements in the rejection rates, the market will require 11 more weeks to exhaust the leaf at the floors.
According to AHL about 20 million kilogrammes of tobacco is yet to be sold hence foreign currency is out of reach.
Earlier, Ben Kalua, Chancellor College Economics Professor described the kwacha volatility as worrisome saying the trends reflect the dynamics of supply and demand.