Malawi Kwacha weakens to lowest since 1993, Bloomberg reports country’s reserves dwindle

Malawi’s kwacha, the worst- performing currency this year, dropped to its lowest in almost a decade as the Southern African country’s reserves continue to dwindle.

The kwacha retreated 3.6 percent to 360 a dollar at 5:20 p.m. in Lilongwe, the capital, according to data compiled by Bloomberg. It has fallen 7 percent this year and is at the weakest since June 22, 1993, when Bloomberg began compiling data on the currency.

Malawi’s foreign-currency reserves fell 4.8 percent to $180 million in the week through Jan. 18, according to the Reserve Bank of Malawi, with reserves able to cover less than one month of imports.

President Joyce Banda devalued the kwacha by a third against the dollar a month after taking office in April to meet conditions set by the International Monetary Fund for a resumption of donor aid. Malawians began nationwide protests last week as inflation soared to 34.6 percent in December.

“The pressure on dollar-kwacha is likely to remain as the external sector is still very poor,” Yvette Babb, a strategist at Standard Bank Group Ltd. in Johannesburg, said in an e-mailed reply to questions today. “Foreign-exchange reserves continue to be eroded.”

Phone calls to Reserve Bank Governor Charles Chuka and Ralph Tseka, a spokesman, weren’t answered.– Bloomberg

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