Political sketch
Formerly Nyasaland, part of British Central Africa, and part of the Federation of Rhodesia and Nyasaland. Independent from the United Kingdom on 6 July 1964.
The first Europeans to explore Malawi were Christian missionaries, notably the Scotsman David Livingstone. They began their efforts in the 1860s. The British created the Nyasaland Districts Protectorate in 1891 as part of their push into the interior of Africa from what is now South Africa. The territory became the British Central Africa Protectorate in 1893 and Nyasaland in 1907. On 1 August 1953, the colonies of Northern Rhodesia, Southern Rhodesia, and Nyasaland formed the Federation of Rhodesia and Nyasaland. The federation dissolved on 31 December 1963 because Northern Rhodesia (now Zambia) and Nyasaland (now Malawi) did not wish to be subject to the white minority that ruled southern Rhodesia (now Zimbabwe). The country became independent from the United Kingdom on 6 July 1964 under the name Malawi. Hastings Kamuzu Banda became prime minister at independence, president on 6 July 1966 when Malawi became a republic, and "president for life" in 1971. Malawi held its first parliamentary elections since independence on 29 June 1978. A referendum of June 1993 favored creation of a multiparty state. Banda lost the presidential election of May 1994. Tobacco and tea are the main exports.
Wars since 1500
First World War in East Africa, 1914-1918 (Germany against United Kingdom, France, Belgium, Portugal) (Malawi was a staging area, but saw no battles).
Convertibility
The sterling area:
On 2 August 1914, soon after the First World War began, the United Kingdom issued a proclamation imposing a one-month moratorium of payment for bills of exchange accepted before 4 August; an act of 3 August 1914 gave legislative sanction to the proclamation. The moratorium was subsequently extended for a month and ended on 4 November 1914. Legally the pound sterling remained convertible into gold and could be exported, but the risk to shipping from German submarines made the cost of shipment prohibitive, so the United Kingdom was in effect off the gold standard. The British government refused to include private shipments of gold in its war-risk insurance scheme. After the war, the export of gold was prohibited from 1 April 1919 under regulations that were given statutory form in 1920. On 28 April 1925 the government announced that the act would not be renewed when it expired on 31 December 1925. On 13 May 1925 the United Kingdom resumed the gold standard.
The United Kingdom abandoned the gold standard on 21 September 1931. The currencies of British colonies were almost all linked to the pound sterling through currency boards; being on a sterling-exchange standard rather than a gold-exchange standard, they followed the pound sterling off gold. Over the next few years, some former British colonies (Australia, New Zealand, South Africa) and other countries that had important trade links with the United Kingdom switched from gold to the pound sterling as their official or actual anchor. The result was termed the sterling area. The United Kingdom imposed exchange controls on 4 September 1939, the day after entering the Second World War. Most countries that were not current or former British colonies soon left the sterling area. Among the remaining countries, both current- and capital-account transactions were free of restrictions within the sterling area, but were restricted in dealings with outside countries. After the Second World War, the United Kingdom returned to the gold standard under the Bretton Woods system. It removed exchange controls on 15 August 1947, but reimposed them on 20 August 1947 after suffering a large loss of foreign reserves. Sterling had a dual exchange rate from 1961 until the United Kingdom abolished exchange controls. The sterling area remained in existence because sterling was not fully convertible. It began to crumble after the United Kingdom again abandoned the gold standard on 23 June 1972. By January 1973 the sterling area had shrunk to the British Isles and a few small British colonies; even Hong Kong had abandoned sterling as its anchor currency. The United Kingdom abolished exchange controls on 24 October 1979, ending the sterling area.
Malawi alone:
On 23 February 1961 the Federation of Rhodesia and Nyasaland extended exchange controls to the sterling area (Federation of Rhodesia and Nyasaland, Currency and Exchange Control [Temporary] Act 1961, cited in Bank of Rhodesia and Nyasaland annual report 1961: 20). Exchange control was extended indefinitely on 30 November 1962 (IMF ARER 1963: 317). It was carried over into Rhodesia (now Zimbabwe), Zambia, and Malawi when the Federation of Rhodesia and Nyasaland dissolved. Malawi left the sterling area on 23 June 1972.
Other
Defaults on or restructurings of debt to the private sector (mainly from Purcell and Kaufman 1993 and Standard & Poor's 2004): 1982 (foreign currency bank debt, oil and interest rate shocks), 1988 (foreign currency bank debt).
Reinhart and Tokatlidis (2000: 33) dating of recent financial liberalization: Domestic (notably interest rates) 1988, external (notably foreign-exchange market and participation by foreign financial institutions) 1995.
Frankel and Rose (1996) list of currency crashes: 1992.
The Southern Rhodesia Currency Board accumulated a reserve against the depreciation of its silver coins in circulation, because it counted the silver content of the coins as an asset on its balance sheet. On 31 March 1940, the end of the board's financial year, the depreciation reserve was 3.6% of total assets, whereas by 31 March 1946 the reserve was 10.6% of total assets (Southern Rhodesia Currency Board annual report, 31 March 1940: 5; 31 March 1946: 4).
References
Primary sources:
--Laws and decrees:
British Central Africa. Gazette. 1894-1907. The British Central Africa Gazette. Zomba: Government Printer. (Succeeded by Nyasaland gazette.)
Great Britain (United Kingdom). Gazette. 1665-present. Oxford Gazette (1996-1666); London Gazette (1666-present). Oxford (1665-1666); London (1666-present): His/Her Majesty's Stationery Office from 1903. Online at <http://www.gazettes.online.co.uk>; as of September 2005, gazettes since 1900 are available.
Malawi. Gazette. 1964-present. Malawi Government Gazette. Zomba: Government Printer.
Nyasaland. Gazette. 19076-1964. The Nyasaland Government Gazette. Zomba: Government Printer. (Successor to British Central Africa gazette; succeeded by Malawi gazette.)
Rhodesia and Nyasaland (Federation). Gazette. 1953-1963. Federal Government Gazette. Salisbury, Southern Rhodesia. (Apparently issued alongside Nysaland gazette; succeeded by Malawi gazette.)
--Publications of monetary authorities:
Bank of Rhodesia and Nyasaland. Annual report. 1956/1961-1964. Annual Report. Salisbury, Southern Rhodesia: Bank of Rhodesia and Nyasaland. (The first annual report covers the period 1956-1961.)
Reserve Bank of Malawi. Annual report. 1964/1965-present. Report and Statement of Accounts for the Period Ended 31st December 1965 (1964/1965); Report and Statement of Accounts for the Year Ended 31st December ... (cover says Annual Report and Statement of Accounts 1966-1972, Annual Report and Statement of Accounts 1973-1976) (1966-1976); Report and Accounts for the Year Ended 31st December ... (1977-2000); Annual Financial and Economic Report (2001-present). Blantyre (1966/1965-1980), Lilongwe (1981-present): Reserve Bank of Malawi.
Reserve Bank of Malawi. Bulletin. 1968-present. Economic and Financial Review (1968-1973); Financial and Economic Review (1974-present). Blantyre (1966/1965-1980), Lilongwe (1981-present): Reserve Bank of Malawi.
Rhodesia and Nyasaland (Federation). Central African Currency Board. Annual report. 1953/1954-1955/1956. First [Second, Third] Report of the Central African Currency Board. Salisbury, Southern Rhodesia: Central African Currency Board (printed by Governent Printing and Stationery Office).
Southern Rhodesia Currency Board. Annual report. 1939/1940-1952/1953. First Report of the Southern Rhodesia Currency Board, Covering the Period Ended 31st March, 1940 (1939-1940); Second [etc.] Report of the Southern Rhodesia Currency Board, Year Ended 31st March, 1941 [etc.] (1940/1941-1952/1953); the Seventh, Ninth, Tenth and Eleventh reports have the word "Annual" in their titles, but the rest do not. Salisbury, Southern Rhodesia: Government Stationery Office.
--Web site of the current monetary authority (viewed 20 September 2005):
<http://www.rbm.mw>
--Other publications or Web sites:
None.
Main secondary sources:
Barclays Bank (Dominion, Colonial and Overseas). 1938. A Banking Centenary: Barclays Bank (Dominion, Colonial and Overseas), 1836-1936. Plymouth, England: Mayflower Press, for private circulation.
De Kock, Gerhard [Petrus Christiaan]. 1954. A History of the South African Reserve Bank (1920-1954). Pretoria: J. L. van Schalk.
Harrigan, Jane. 2001. From Dictatorship to Democracy: Economic Policy in Malawi 1964-2000. Aldershot, England: Ashgate Publishing.
Henry, J[ames] A., and H. A. Siepmann. 1963. The First Hundred Years of the Standard Bank. London: Oxford University Press. (The Standard Bank operated widely in Africa.)
IMF ARER. 1950-present. International Monetary Fund. Annual Report on Exchange Restrictions (1950-1978), Annual Report on Exchange Arrangements and Exchange Restrictions (1979-1988), Exchange Arrangements and Exchange Restrictions: Annual Report (1989-present). Washington: International Monetary Fund. (Contains information on IMF member countries and some of their dependencies.)
Pick's Currency Yearbook. 1955-1977/79. New York: Pick Publishing. Succeeded by Pick's World Currency Report and later World Currency Yearbook.
Reserve Bank of Malawi. 1975. Tenth Anniversary, 1965-1975. Lilongwe: Reserve Bank of Malawi.
Reserve Bank of Zimbabwe. 1983. The Currency Media of Southern Rhodesia (from the Time of the Charter to 1953), of the Federation of Rhodesia and Nyasaland (from 1954 to 1963), of Rhodesia (from 1964 to 1979), and of Zimbabwe (from 1980). Harare: Reserve Bank of Zimbabwe.
Sowelem, R[afik] A[hmed]. 1967. Towards Financial Independence in a Developing Economy: An Analysis of the Monetary Experience of the Federation of Rhodesia and Nyasaland, 1952-63. London: Allen and Unwin.
Wills, A. J. 1985. An Introduction to the History of Central Africa: Zambia, Malawi, and Zimbabwe, 4th edition. Oxford: Oxford University Press.
Monetary authorities: Malawi
| Dates | Type | Name | Source | Remarks |
| August 1894
-7 June 1940 |
free banking | multiple (2) note-issuing banks | United Kingdom, Livingstonia Central African Company (later African Lakes Corporation), act of incorporation, 1878, cited in Wills 91985: 111); Standard Bank of British South Africa (later Standard Bank of South Africa) Memorandum of Association, 13 October 1862, cited in Henry and Siepmann (1963: 5) | The first bank was the African Lakes Corporation (headquarters initially Glasgow, Scotland, later London, England), in Blantyre, in August 1894 [source to come; perhaps Webb or Crossley and Blandford]. The second bank was the Standard Bank of South Africa (headquarters London, England), in Blantyre, on 29 April 1901 (Henry and Siepmann 1963: 329). In 1918, the banking business of the African Lakes Corporation was absorbed by the National Bank of South Africa (headquarters Johannesburg, South Africa); it in turn was absorbed in February 1926 by Barclays Bank (Dominion, Colonial and Overseas) (headquarters London, England) (Barclays Bank [Dominion, Colonial and Overseas] 1938: 167, 189). No other banks issued notes in Malawi during this period. Notes issued by banks ceased to be legal tender on 1 March 1942 (Southern Rhodesia Currency Board annual report, 31 March 1942: 1). |
| 8 June 1940
-11 March 1954 |
joint currency board (as part of a currency union) | Southern Rhodesia Currency Board (headquarters Salisbury, Southern Rhodesia [now Harare, Zimbabwe]) | Southern Rhodesia, Coinage and Currency Act, Act No. 32 of 1938, cited in Southern Rhodesia Currency Board annual report, 31 March 1940: 1; Southern Rhodesia, Proclamation No. 36 of 1939 cited in Southern Rhodesia Currency Board annual report, 31 March 1940: 1; Southern Rhodesia, Coinage and Currency Amendment Act, No. 23 of 1942, cited in Southern Rhodesia Currency Board annual report, 31 March 1943: 1; Southern Rhodesia, Coinage and Currency Amendment Act, 1947, cited in Southern Rhodesia Currency Board annual report, 31 March 1947: 1 | The three colonies of British Central Africa established a currency board to gain seigniorage for member governments. Initially the agreements of Northern Rhodesia (now Zambia) and Nyasaland (now Malawi) to participate were informal, but they later became formal. Nyasaland made an agreement with Southern Rhodesia in late 1943 or early 1944 accepting the act of 1938 (cited in Southern Rhodesia Currency Board annual report, 31 March 1944: 1; see also Southern Rhodesia Currency Board annual report, 31 March 1941: 1). The currency board took over issuance of coins from the Southern Rhodesian treasury on 1 March 1940, and issued its first notes on 8 June 1940. The 1942 amendment allowed the currency board to hold up to 7% of its assets in securities of Southern Rhodesia and up to 3% in securities of Northern Rhodesia. Total reserves were 110%, so the principle of 100% foreign reserve backing was effective. The 1947 amendment raised the percentages to 10% for Southern Rhodesian securities, 7% for Northern Rhodesian securities, |
| 12 March 1954
-31 March 1956 |
joint currency board (another) (as part of a currency union) | Central Africa Currency Board (headquarters Salisbury, Southern Rhodesia [now Harare, Zimbabwe]) | Federation of Rhodesia and Nyasaland, Coinage and Currency Act, Act No. 5 of 1954, cited in Central African Currency Board annual report, 31 March 1954: 1 | Northern Rhodesia (now Zambia) and Nyasaland (now Malawi) gained a larger role in the new joint currency board. British coins remained accepted as legal tender through 31 December 1954 in Northern Rhodesia and Nyasaland (Central African Currency Board annual report, 31 March 1954: 2). The Central Africa Currency Board used Southern Rhodesian notes and coin designs and never issued its own distinctive designs. The only local assets of the currency board were a small amount of Southern Rhodesian securities, never exceeding 5% of total assets, despite provisions that allowed it to hold more. |
| 1 April 1956
-15 November 1964 |
joint central bank (as part of a currency union) | Bank of Rhodesia and Nyasaland (headquarters Salisbury, Southern Rhodesia [now Harare, Zimbabwe]) | Federation of Rhodesia and Nyasaland, Bank of Rhodesia and Nyasaland Act, No. 2, March 1956, cited in Central African Currency Board annual report, 31 March 1956: 4 and Bank of Rhodesia and Nyasaland annual report 1961: 1 | The Federation of Rhodesia and Nyasaland established a central bank as the monetary counterpart to greater political self-government. The central bank issued federal notes and coins. |
| 16 November 1964
-present (2005) |
own central bank | Reserve Bank of Malawi (headquarters Blantyre, Malawi / Lilongwe, Malawi from mid 1981) | Malawi, Reserve Bank of Malawi Act, N. 35, 4 July 1964, cited in Reserve Bank of Malawi annual report 1964/1965: 5 | Malawi, Zambia, and Rhodesia (now Zimbabwe) each established separate national central banks when the Federation of Rhodesia and Nyasaland broke up. Malawi's central bank issued its first notes on 16 November 1964 and its first coins on 25 January 1965 (Reserve Bank of Malawi annual report 1964/1965: 4). Malawi joined the IMF on 19 July 1965. |
Exchange rate arrangements: Malawi
| Dates | Official arrangement | Source | Unofficial arrangement, if different | Remarks |
| 1891
-1 November 1914 |
fixed; local £1 = UK£1 = 7.32238g gold | Mashonaland, Ordinance No. 3 of 1891 (of the British South Africa Company, which operated present-day Zimbabwe and Zambia as a concession at the time), cited in Chalmers (1893: 240); Rhodesia, Ordinance No. 6 of 1894, cited in Reserve Bank of Zimbabwe (1983: 5) (guesswork involved here; see Remarks) | Malawi was declared a British protectorate in 1891. The 1891 Mashonaland ordinance adopted the laws of Cape of Good Hope then in force, including its coinage laws. The 1894 ordinance extended the territorial limits of the laws farther north, apparently including present-day Zambia and possibly including present-day Malawi. Royal (United Kingdom) proclamations of 1910 and 1911 specified various British coins for use in Southern Rhodesia. Nyasaland, as Malawi was then called, began to use Southern Rhodesian coins in 1933 (Reserve Bank of Zimbabwe 1983: 5-6). The Southern Rhodesian pound, later to be used in what are now Zimbabwe, Zambia, and Malawi, did not exist as an officially separate currency from the pound sterling until 1 March 1940. | |
| 2 November 1914
-17 May? 1925 |
fixed; local £1 = UK£1 | de Kock (1954: 7-8) on South Africa | The currencies of the United Kingdom and South Africa both floated against gold in this period. Southern Rhodesia (now Zimbabwe) followed, and Nyasaland (now Malawi) followed Southern Rhodesia because Southern Rhodesia was the regional financial power. Local bank notes were made forced tender in Southern Rhodesia by Southern Rhodesia, Bank Notes Ordinance, 1922; Nyasaland may have passed a local act applying the law in its territory. The acts were repealed in 1925 when the United Kingdom returned to the gold standard (Bond 1988: 57 n. 6). | |
| 18 May? 1925
-20 September? 1931 |
fixed; local £1 = UK£1 = 7.32238g gold | de Kock (1954: 78) on South Africa | The United Kingdom returned to the gold standard on 27 April 1925; South Africa returned on 18 May 1925. | |
| 12 October 1931
-31 October 1940 |
fixed; local £1 = UK£1 | inferred from Henry and Siepmann (1963: 237) | Pick's Currency Yearbook (1964-1965: 411) says of Southern Rhodesia that black-market trading started at the beginning of the Second World War, but was rarely sizeable except when there was speculation that the pound sterling would be devalued or there was local unrest. Rates generally followed rates for the South African pound, but at a level 4-5% more depreciated. I assume this held also for Nyasaland. | Northern and Southern Rhodesia (now Zambia and Zimbabwe) abandoned the gold standard soon after the United Kingdom, which had done so on 21 September 1931, but considerably before South Africa. A local act (Southern Rhodesia, Act No. 34 of 1931) was passed to make notes issued by banks forced tender until currency board notes replaced them starting in 1940 and ending with the withdrawal of all notes issued by banks in 1942. I infer that Nyasaland again followed Southern Rhodesian practice and legislation, althogh I have found no direct reference on the matter. |
| 8 June 1940
11 March 1954 |
fixed (as part of a currency union); Southern Rhodesian £1 = UK£1 | Southern Rhodesia, Coinage and Currency Act, Act No. 32 of 1938, cited in Southern Rhodesia Currency Board annual report, 31 March 1940: 1 | See above. | The Southern Rhodesian pound was created when a regional currency board came into existence. It was named after the pound sterling. Nyasaland had shared in the seigniorage from Southern Rhodesian government coins since the beginning, by informal understanding. Nyasaland made an agreement with Southern Rhodesia in late 1943 or early 1944 accepting the act of 1938 (cited in Southern Rhodesia Currency Board annual report, 31 March 1944: 1; see also Southern Rhodesia Currency Board annual report, 31 March 1941: 1). |
| 12 March 1954
-31 March 1956 |
fixed (as part of a currency union); Central African £1 = UK£1 | Federation of Rhodesia and Nyasaland, Coinage and Currency Act, No. 2 of 1954, cited in Central Africa Currency Board, 31 March 1954: 1 | See above. | The Southern Rhodesian pound was renamed to reflect the increased participation of Northern Rhodesia (Zambia) and Nyasaland (Malawi). British coins were demonetized in Northern Rhodesia and Nyasaland on 1 January 1955. |
| 1 April 1956
-15 November 1964 |
pegged (as part of a currency union); Central African £1 = UK£1 | Federation of Rhodesia and Nyasaland, Bank of Rhodesia and Nyasaland Act, No. 2, March 1956, cited in Central African Currency Board annual report, 31 March 1956: 4 and Bank of Rhodesia and Nyasaland annual report 1961: 1; Government Gazette Notice No. 52 of 1956 | The black market rate was Central African £1= US$2.65 in 1960-1961, versus an official cross rate of US$2.80 (Pick's Currency Yearbook 1964-1965: 411). In the black market the Central African pound was therefore more depreciated against the US dollar than the pound sterling was. | The Federation of Rhodesia and Nyasaland replaced its currency board with a central bank, so the exchange rate changed from fixed to pegged. |
| 16 November 1964
-26 June 1966 |
pegged; Malawi £1 = UK£1 | Malawi, Reserve Bank of Malawi Act, cap. 44:02, July 1964 cited in Reserve Bank of Malawi annual report 1964/1965: 5; see also p. 3 of same source | Pick's Currency Yearbook (1970: 340) records a parallel market rate of Malawi £1 = US$ 2.50 in 1965, when data begin. | The Malawi pound replaced the Central African pound following the breakup of the Federation of Rhodesia and Nyasaland, which occurred on 31 December 1963. |
| 27 June 1966
-19 November 1967 |
pegged; Malawi £1 = UK£1 = 2.48828g gold = US$2.80 | IMF ARER (1967: 402, 406) | Pick's Currency Yearbook (1970: 340) records a parallel market rate of Malawi £1 = US$ 2.60 in 1966. | Malawi registered a gold parity with the IMF. |
| 20 November 1967
-14 February 1971 |
pegged; Malawi £1 = UK£1 = 2.13281g gold = US$2.40 | Reserve Bank of Malawi annual report 1967: 3; IMF ARER (1968: 274, 277) | Pick's Currency
Yearbook (1970: 340)
records parallel market
rates of Malawi £1 =
US$2 in 1967 and
US$2.22 in 1968.
RR: Parallel market premium in mid double digits from July 1970, when monthly data begin. |
Followed the devaluation of the pound sterling against gold on 18 November 1967. |
| 15 February 1971
-22 August 1971 |
pegged; 2 Malawi kwacha = UK£1, or 1 Malawi kwacha = 1.06641g gold = US$1.20 | Malawi, Decimal Currency Act, No. 30, August 1970, cited in Reserve Bank of Malawi bulletin, December 1970: 9; Reserve Bank of Malawi bulletin, March 1971: 16; IMF ARER (1972: 279, 281) | RR: Parallel market premium in mid double digits. | Introduced a decimal currency at 2 Malawi kwacha = Malawi £1 on the same day the United Kingdom decimalized. Kwacha means "dawn" in the local Chewa language. |
| 23 August 1971
-21 December 1971 |
pegged; 2 Malawi kwacha = UK£1, or 1 Malawi kwacha = 1.06641g gold (nominally) | Reserve Bank of Malawi, announcement of 31 August 1972, cited in Reserve Bank of Malawi bulletin, September 1971: 24; IMF ARER (1972: 281) | RR: Parallel market premium in mid double digits. | Gold convertibility for all countries ended in practice when the United States abandoned the gold standard on 15 August 1971. The Malawi kwacha remained pegged to the pound sterling, hence it in effect unpegged from the US dollar. |
| 22 December 1971
-26 June 1972 |
pegged; 2 Malawi kwacha = UK£1, or 1 Malawi kwacha = 1.06641g gold (nominally) = US$1.30286 | Malawi, Minister of Finance, announcement of late December 1971, cited in Reserve Bank of Malawi bulletin, December 1971: 28; IMF ARER (1972: 281) | RR: Parallel market premium in mid double digits. | In effect became repegged to the US dollar alongside the pound sterling after the United States devalued the dollar against gold on 18 December 1971. The pound sterling remained the anchor curency. The central bank adlpoted a dealing spread of US$1.2735-1.3321 per Malawi kwacha and margins of +/-2.25% for other major international currencies except the pound sterling, for which it retained narrow margins. |
| 27 June 1972
-18 November 1973 |
pegged; 2 Malawi kwacha = UK£1, or 1 Malawi kwacha = 1.06641g gold (nominally) | Reserve Bank of Malawi bulletin, June 1972: 5 | RR: Parallel market premium falling from mid double digits to single digits. | Continued to use the pound sterling as the anchor currency after the United Kingdom floated the pound sterling on 23 June 1972. |
| 19 November 1973
-8 June 1975 |
flexible basket of US dollar and pound sterling; official rate 1 Malawi kwacha = 1.06641g gold (nominally) | Reserve Bank of Malawi bulletin 1973, no. 4: 6, 38-9; 1975, no. 2: 43 | RR: Parallel market premium climbs back into mid double digits. | Managed the kwacha according to a trade-weighted basket of the pound sterling and US the dollar. The basket allowed some freedom of management. The pound sterling at the time was a weak currency. |
| 9 June 1975
-31 March 1978 |
pegged to rigid basket; 1.054074 Malawi kwacha = 1 SDR, or 1 Malawi kwacha = 0.9487 SDR = 1.06641g gold (nominally) | Reserve Bank of Malawi bulletin 1975, no. 2: 43; IMF ARER (1976: 302) | RR: Premium of over 100% in 1977. | Switched to the SDR as the anchor currency as a response to the instability of the US dollar and the pound sterling in the mid 1970s. The cross rates of the kwacha were approximately 1.97 Malawi kwacha = UK£1 and 1 Malawi kwacha = US$1.18. Until IMF ARER (1979: 264), IMF and central bank publications only list the value of the kwacha to four digits, but I have extended the value of 1.054074 kwacha back to the start of this period. |
| 1 April 1978
-23 April 1982 |
pegged to rigid basket; 1.054074 Malawi kwacha = 1 SDR | International Monetary Fund, Board of Governors, Resolution No. 31-4, 30 April 1976 ("Second Amendment") | RR: Parallel market premium of over 100% at times. | The system of gold par values officially ended by agreement of IMF members. |
| 24 April 1982
-16 September 1983 |
pegged to rigid basket; 1.21212 Malawi kwacha = 1 SDR | Reserve Bank of Malawi bulletin 1982, no. 2: 41 | RR: Parallel market premium typically in mid double digits. | Devalued 15% as part of a package of policy measures intended to restart growth after two years of stagnation and a weak balance of payments position. |
| 17 September 1983
-16 January 1984 |
pegged to rigid basket; 1.3577 Malawi kwacha = 1 SDR | Reserve Bank of Malawi bulletin 1983, no. 4: 36 | RR: Parallel market premium in mid double digits. | Devalued 12% "to bring the external value of the Kwacha in line with the country's economic fundamentals" Reserve Bank of Malawi bulletin 1983, no. 4: 36-7). |
| 17 January 1984
-6 February 1994 |
pegged to rigid basket, becoming more flexible over time? | Reserve Bank of Malawi bulletin 1983, no. 4: 37; 1985, no. 2: 23; 1986, no. 3: 25; 1987, no. 1: 19; 1988, no. 1: 26; 1990, no. 1: 25-6; 1992, no. 1: 24 | RR: Parallel market premium in mid double digits. Freely floating. | Switched to a basket as the anchor and depreciated the midpoint by 3.2%. According to the Web site of Malawi's central bank (viewed 19 September 2005), the composition of the basket was: US dollar, 27%; pound sterling, 27%; South Africa rand, 18%; German mark, 7%; Japanese yen, 7%; French franc, 7%; Netherlands guilder, 7%. Devaluations against the basket, and their equivalents in terms of the US dollar, were as follows: 2 April 1985, 14.84% (from 1.5277 to 1.7940 Malawi kwacha = US$1); 16 August 1986, 10% (from 1.8045 to 2.0031 Malawi kwacha = US$1); 7 February 1987, 20% (from 1.8815 to 2.3513 Malawi kwacha = US$1--because of the depreciation of the US dollar against other currencies in the basket, the kwacha had appreciated against the dollar); 16 January 1988, 15% (from 2.0938 to 2.4619 Malawi kwacha = US$1); 24 March 1990, 7%. As of 31 December 1990, the exchange rate spread was 2.6603-2.6337 Malawi kwacha per US dollar. On 28 March 1992, devalued 15%, to approximately 3.30 Malawi kwacha = US$1. On 11 June 1992, devalued 22%, |
| 7 February 1994
-30 December 1997 |
independent float (IMF: reclassified by as managed float 31 December 1997, reclassified as independent float 27 April 2000) | Reserve Bank of Malawi bulletin 1994, no. 1: 25; IMF ARER (1998: [page to come]; 2001: [page to come]) | RR: Parallel market premium in mid double digits initially, falling to single digits. Freely falling February 1994-December 1994; peg to US dollar January 1995-July 1997; freely falling from August 1997. | Replaced weekly auction sessions by the central bank with an interbank exchange market as the means of determining the exchange rate. The currency floated, beginning at 6.70 Malawi kwacha = US$1 and immediately depreciated by more than 40%. The central bank depreciated the currency in July 1997 (Reserve Bank of Malawi Web site, viewed 19 September 2005; the site gives no date). I take the IMF's reclassification as a managed float in 1997 as representing uncertainty on the IMF's part rather than as being a true change of the exchange rate arrrangement |
| 31 December 1997
-26 April 2000 |
managed float | IMF ARER (1998: 555) | RR: Parallel market premium in single digits to December 1998, when data end. Freely falling to August 1999; managed float from September 1999-December 2001. Parallel market premium in single digits until 1998, when data end. | The IMF reclassified Malawi's exchange rate arrangement without explanation. (IMF ARER 1999: 531 places the date of the change at 30 April 1998, apparently a mistake.) On 24 August 1998 the central bank depreciated the exchange rate from 26 to 34 Malawi kwacha = US$1. At the same time, it told commercial banks they were free to set foreign-exchange rates at market-clearing levels. The currency immediately depreciated to 47 Malawi kwacha = US$1 before recovering somewhat (Reserve Bank of Malawi bulletin 1998, no. 3: 28; IMF ARER 1999: 527). |
| 27 April 2000
-present (2005) |
independent float | IMF ARER (2001: 565) | RR: Managed float from September 1999-December 2001. | The IMF reclassified Malawi's exchange rate arrangement because the central bank ceased foreign-exchange intervention except to meet targets for net foreign assets and to perform seasonal smoothing of the exchange rate. |