Thoughts on Kwacha’s over-valuation
GC Matchaya I may not claim to have a lasting answer to this question however given the silence I will try to give my sketch of ideas on this as follows. The concerns about the Mw Kwacha being held at some fixed but high level surely spring from many angles but possibly the most useful one for most of us is the effect of such an exchange rate regime on the Malawi’s national accounts analysed in the context of a nation that has more on its table (projects etc requiring increased government spending) to deliver. As appoint of departure therefore it might be important to recap the basic major components of the two major accounts that may be impacted by the exchange rate regime more directly and these are the current account here proxied by the trade balance (value of exports-value of imports) and the capital account proxied by the value of capital inflows into Malawi minus the value of capital outflows to other countries. Now remember again that under a market determined exchange rate, th...