Malawian Kwacha is expected to depreciate further until it reaches the spread between the formal and informal market exchange rates according to the Economist Intelligence Unit(EIU), a research and analysis division of the Economist Group.
Following its analysis quoted in the Nico Asset Managers Monthly Economic Report for February, the firm states that bi-monthly exchange rate auctions the Reserve Bank of Malawi(RBM) holds with authorized dealer banks will gradually shift towards a market-led exchange rate.
Furthermore, the EIU forecasts that Malawian Kwacha will be steadily depreciating until it reaches its equilibrium of K2090.00 against US Dollar until 2028. The EIU has warned that the continued depreciation of Malawian Kwacha will increase business costs by making imports of raw materials and capital goods more expensive in addition to making businesses’ external obligations unbearable to Malawians.