Mozambique's central bank left its benchmark standing facility rate unchanged at 7.50 percent as it continued to maintain a "prudent monetary policy" in light of international risks from the continuous strengthening of the U.S. dollar and the persistent fall in commodity prices that impact the country's balance of payments.
The Bank of Mozambique, which has kept rates steady this year after cutting by 75 basis points last year, added that it would intervene in the interbank market to reach its target of a monetary base of 60.577 meticais in August compared with provisional data for July that show a base of 60.277 billion, in line with the forecast of 60.075 billion.
In annual terms the increase in the July monetary base was 16.2 percent, with notes and coins up by 525 million and central bank reserves by 1.274 billion.
Mozambique's metical currency started depreciating in October last year but since June it has stabilized, "reflecting essentially the interventions by the Bank of Mozambique," the central bank said.
Today the metical was quoted at 38.9 to the U.S. dollar for a 15 percent depreciation this year, reflecting the stronger U.S. dollar along with the drop in international commodity prices that has hit Mozambique's exports.
Mozambique's international reserves rose by $13.6 million to $2.6134 billion in July, helped by the disbursement of external donor funds and for various state projects along with central bank purchases of $6.8 million, the bank said.
Mozambique's inflation rate rose slightly to 1.5 percent in July from 1.36 percent in June.