Reserve Bank of Malawi has ordered Auction Holdings Limited to begin a mandatory sale of 30 percent of it’s foreign exchange proceeds, generated from tobacco auction floors to RBM immediately at the prevailing exchange rate as a way of addressing the dwindling Forex situation in the country.
In a letter signed by the central banks Govonor Wilson Banda, dated 24th March, the decision has been arrived at due to market developments hugely contributed by the global pandemic covid 19, a thing that compelled the regulator to re-introduce an export proceeds surrender requirement as part of a solution.
Meanwhile, the central bank has been putting various measures in place in an effort to mitigate the country’s worsening forex situation including gold purchases.
The country’s import cover countinues to take a downward trend with latest at 6 weeks against the recommended requirement of 3 months.
However, RBM showed optimism that the situation will change, citing the contributing pressures are mostly short lived.