By Burnett Munthali
Government says it is establishing eight mega fish farms across the country as one way of boosting the country’s forex. These include the three hundred hectares mega fish farm at Kasinthula Research Station in Chikwawa District.
Minister of Natural Resources and Climate Change Michael Usi said this when he appreciated land designated for the exercise in the district. Apart from banking on government financing, he said the concept is also open to investors, further expressing hope that tangible progress will be attained within the next two years.
Additionally, to boost our income through Forex, we also need to develop a well-defined trading strategy. This includes setting clear goals, determining our risk tolerance, and establishing entry and exit points. Many traders find success in technical and fundamental analysis, which involves studying charts and economic indicators.
By increasing exports, Malawi can earn more U.S. dollars, which can then be used to build up its reserves. Attracting foreign direct investment (FDI): Encouraging foreign companies to invest in the country can bring in U.S. dollars, which can contribute to the reserves.
Higher interest rates increase the value of a country’s currency. Higher interest rates tend to attract foreign investment, increasing the demand for and value of the home country’s currency.
Banks mostly facilitate transactions on behalf of their customers, but they can also trade with each other or take speculative positions (prop trading). When dealing with customers, banks often hedge their exposure as they do not have infinite capital and do not want to take too much of a risk.
There are many factors which influence the exchange rate. They include the political climate of a country, inflation, public debt, GDP, confidence, central bank/government intervention, and the balance of trade.
Finally, we also need to make Malawi currency strong. A currency’s strength is determined by the interaction of a variety of local and international factors such as the demand and supply in the foreign exchange markets; the interest rates of the central bank; the inflation and growth in the domestic economy; and the country’s balance of trade.
Unfortunately, Malawi Kwacha has been falling and affecting the economy. Devaluation is causing imports to appear more expensive on domestic markets, and decrease purchasing power in foreign markets. This can encourage domestic consumption but that is not the case as local products and services have equally become extremely expensive while some goods simply are not available domestically.
The most common method to value currency is through exchange rates. The two main exchange rate systems are fixed rate and floating rate systems. To make a weaker currency stronger, a central bank can intervene by purchasing the weaker currency in exchange for a stronger currency, such as the US dollar or the euro. This process can lead to an increase in demand for the weaker currency, which can result in an increase in its value.
