Although it does not seem like much, it will likely have a measurable impact here. Our dollars will go further in the country, which is sort of good for us. It also might help exports of things like tobacco and our beloved hot sauce, Nali, as those prices decrease for foreign buyers. But the prices of imported goods will soar further -- affecting the prices of things I love like fuel, cereal, and yogurt. Can I go 9 months without yogurt if it costs $9 per tub???
The economists have been begging for this type of devaluation for months, if not years. This is a small victory for them. Hopefully, the shortage of foreign exchange (forex) will ease slightly as a result. After more than 8 weeks of crisis level fuel shortages, I would like to fill my tank. I might even be willing to pay $200 to do it! Maybe.
When I told the guys here the first thing they said was, "How am I going to pay my school fees now? It'll be over MK 250 to the Pound." (They are becoming certified accountants via schools in the UK.) This really helped me put a human face on the impact depreciation has on normal people here.
ReplyDeleteThis is still past due though. Malawi has depreciated its overvalued currency in over 2 years. This move doesn't even keep up with inflation. If Malawi is ever going to encourage any significant outside investment it simply has to let its current float more freely. Not doing so not only discourages exports (which is the only Malawi will ever address its trade imbalance), but also leads to Malawians being hurt by these big jumps in its currency (versus smaller, more consistent changes).
1) Yogurt at any cost. It's yummy. It goes well in both brownies and smoothies.
ReplyDelete2) UK accounts are going for "chartered" account, not certified. I got what you meant though.
3) I agree all currencies should float. If I drop them in the water, as I often have, they are easier to retrieve.