Mozambique's central bank maintained its benchmark standing facility rate at 7.50 percent, noting the favorable evolution of inflation against the prevailing international risks from a slowdown in global economic activity and the significant impact on the country's balance of payments due to the persistent decline in commodity prices.
The Bank of Mozambique (CPMO), which cut its rate by 75 basis points in 2014, also said it would intervene in interbank markets to ensure a monetary base of 56.842 billion meticais in May, up from a preliminary estimate of 54.417 billion for April, an annual increase of 18.4 percent.
Mozambique's metical has appreciated since early April, "reflecting the measures taken by the Bank of Mozambique and the recent behavior of the US dollar," the CPMO said.
Today the metical was quoted at 35.45 to the U.S. dollar, up from a low of 37.37 on April 3 but still below 33.04 at the start of the year, for a depreciation of 6.8 percent.
Net International Reserves (NIR) of Mozambique rose by US$34.6 million to $2.523 billion, largely due to potential foreign exchange gains of $40.1 million based on net sales of only $12.8 million compared with sales of $77.1 million in March 2014 and sales of $67.7 billion last April.
Mozambique's consumer price inflation rate fell to 1.98 percent in April from 3.1 percent in March and the central bank said the INE business confidence indicator deteriorated in March after a slight improvement in the previous month, "reflecting the pessimism of entrepreneurs about the prospects of employment, demand and prices, in contrast to the positive assessment of current demand."