Professor of applied economics and director of the Troubled Currencies Project in the United States, Steve Hanke, has described the Malawi Kwacha as a “junk currency”, saying it has depreciated against the United States dollar by over 40 percent since 2020.
Hanke who is a professor at the Johns Hopkins University in the United States, every week publishes Hanke’s currency watchlist, a group of currencies that have depreciated by at least 20% against the dollar since January 2020.
This week, the Malawi Kwacha is 10th on the list having depreciated by 40.45% since 2020.
“The Malawian kwacha has depreciated against the USD by 40.45% since Jan 2020. The kwacha is yet another central bank junk currency,” says Hanke in a Twitter post early this morning.
#Malawi is in 10th place in this week's Hanke’s #CurrencyWatchlist. The Malawian kwacha has depreciated against the USD by 40.45% since Jan 2020. The kwacha is yet another central bank junk currency. pic.twitter.com/Uq8xypB9Mn
— Steve Hanke (@steve_hanke) June 26, 2022
Malawi Government recently devalued the Kwacha by 25 percent reportedly on advice from the International Monetary Fund. Government said the devaluation was implemented to deal with a shortage of foreign exchange on the market.
The devaluation has led to an increase in prices of basic commodity such as cooking oil, maize and recently fuel.