The Reserve Bank of Malawi (RBM) has ruled out any immediate plans to devalue the kwacha, saying renewed confidence from development partners and increased foreign exchange inflows will stabilise the currency in the short-term.
In a statement issued this week, RBM Governor McDonald Mafuta Mwale said the central bank has “no reason for a devaluation” and urged financial institutions holding foreign exchange for speculative purposes to release it through authorised dealer banks to ease market pressures.
development partners. | Nation
He said: “We have observed that there is a lot of goodwill from development partners towards the new government under the leadership of His Excellency President Arthur Peter Mutharika, to the extent that we have seen an increase in forex inflows.
“We project this to continue into the foreseeable future.”
The governor commended newly appointed Minister of Finance, Economic Planning and Development Joseph Mwanamvekha for swiftly re-engaging international partners, saying discussions with institutions such as the International Monetary Fund (IMF) and the World Bank were already yielding positive signals for more financial commitments.
“We are going to the IMF and World Bank annual meetings with optimism to secure more financial commitments to our country as we develop our own capacity to generate forex,” he said.
However, the governor warned commercial banks against fuelling parallel market activity, saying the central bank will not tolerate malpractices in the foreign exchange market.
He said: “We at the RBM expect sanity in the financial sector.
“Any abuse in the forex market through derivatives such as forwards and options will not be tolerated. The RBM will not hesitate to penalise any bank involved in these malpractices.”
But while Mwale said foreign exchange inflows were improving, he did not disclose the current reserve position.
However, figures from the RBM August 2025 Monthly Economic Review showed that the country’s import cover stood at 2.1 months, well below the 3.9 months recommended by international financial institutions for credit-constrained economies such as Malawi.
The statement comes amid continued speculation about a potential currency adjustment as the kwacha faces pressure from persistent trade imbalances and rising import demand.
The kwacha is currently trading at between K3 500 and K4 500 to the dollar on the parallel market against the K1 751 prescribed by the central bank.
In May 2022, RBM implemented a 27 percent devaluation of the kwacha purportedly to align the currency with the parallel market rate and attain its true value. The central bank further devalued the kwacha by 44 percent in November 2023, but both decisions saw the parallel rate gap widening further.
