Malawi devalues currency by 34pc

The central bank’s notice of official exchange rates put one US dollar at 250 kwacha, compared to 166 kwacha on Friday, a 33,598 percent value drop.
“Following this devaluation, the kwacha is now fully liberalised,” the Reserve Bank of Malawi said in a statement.
On the black market, the US dollar has sold at more than 300 kwacha, a disparity that drove foreign currency out of the bank­ing system and into the hands of informal dealers. At 250 kwacha per dollar the exchange rate is well adjusted, as the black market is certainly under-devalued,” the cen­tral bank said
The late president Bingu wa Mutharika had fixed the exchange rate in 2005.
Since then he had steadfastly refused to make a major devaluation, which he argued would hurt the poor. The IMF has for months called for a deval­uation to end a shortage of foreign currency that has left Malawi unable to import enough fuel to keep the nation running. After Mutharika’s sud­den death last month, the new President Joyce Banda has moved quickly to restore relations with inter­national lenders and donors. Several key donors — including for­mer colonial power Britain — suspended aid to Malawi, citing concerns about growing authoritarian tendencies in Mutharika’s gov­ernment. The IMF said in June last year that its pro­gramme with Malawi was “off-track” because the government had failed to review a US$79,4-million credit facility meant to cushion the foreign currency shortages. — AFP.