Monday, April 13, 2015

Mozambique maintains rate as metical FX rebounds

    Mozambique's central bank maintained its benchmark standing facility rate at 7.50 percent, noting slowing international economic growth along with a continued strengthening of the U.S. dollar and falling prices of main global commodities, which impacts countries like Mozambique.
    The Bank of Mozambique (CPMO), which cut its rate by 75 basis points in 2014, added that it would intervene in markets to ensure a monetary base of 55.520 billion meticais in April.
    The central bank also noted "heavy pressure" in the domestic foreign exchange market in March, with the metical quoted at 34.60 to the U.S. dollar, a monthly depreciation of 7.51 percent for accumulated depreciation of 9.49 percent and annual depreciation of 13.7 percent.
    At the start of the year the metical was quoted at 33.0 to the dollar.
     The depreciation mainly reflects the stronger U.S. dollar in international markets, the pressure from demand for foreign currency to import goods and services in the context of reconstruction and the reduction in export earnings in the face of a widespread decline in traditional export markets, the CPMO said.
    However, the central bank added that the latest data "show a relexation of pressure in the foreign exchange market as a result of the concerted actions of the Bank of Mozambique," with data to April 8 showing an average exchange rate of 36.67 to the dollar, an appreciation of 5.8 percent from March 31.
    Mozambique's net international reserves fell by $47.6 million to $2.463 billion, reflecting net sales by the central bank of $77.1 million and losses in potential exchange of $46 million, which was cushioned by the dispursement of $47.4 million in foreign aid.
    Mozambique's consumer price inflation rate eased to 3.11 percent in March from 3.99 percent the previous month.


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