Malawi is devaluing the kwacha’s by one third.
In a notice to authorized dealer banks seen by Reuters, the country’s central bank said the kwacha’s exchange rate to the U.S. dollar would be adjusted to MKW1,700 from MKW1,180.
The southern African country has been struggling with dwindling foreign currency reserves due in part to declining revenue from tobacco exports.
Malawi earned $282.62 million from tobacco sales during the 2023 marketing season. While this figure was up substantially from the $182.12 million generated by sales of the golden leaf in the previous season, it is not nearly enough to alleviate the nation’s trade imbalance.
In 2020, Malawi’s import bill was $2.8 billion, versus exports of only $800 million, according to the National Statistics Office.
Depending on the season, tobacco accounts for between 40 percent and 70 percent of Malawi’s export earnings. To reduce its heavy reliance on a single commodity, the country has been working to diversify its economy by developing supplemental value chains, such as mushrooms, bananas and groundnuts.