Reserce Bank of Malawi’s first pilot of Foreign Exchange Auction held last week Friday has started on a low note as only three of the eight Authorized Dealer Banks participated.
In the arrangement, commercial banks are expected to be submitting bids to sell foreign exchange to the Central Bank at their own respective prices.
RBM Governor, Wilson Banda says, in a statement, the results cannot be used to determine the official exchange rate for the local currency as they may not be representative of the entire banking system.
Banda has therefore indicated they will continue engaging other banks in preparation for the next auction.
Last week, RBM said the auctions would facilitate the discovery of the prevailing market-clearing exchange rate for the Malawi Kwacha against major trading currencies, thereby promoting transparency in the determination of the exchange rate.
However, some economic experts fear the move has prospects of triggering a sharp depreciation of the local currency if not properly managed.
