Mozambique's central bank maintained its benchmark standing facility rate at 7.50 percent and said it would strengthen its intervention in interbank markets to ensure that the country's monetary base reaches 61.938 billion meticais, up from a base of 60.248 billion in August, which was below July's base of 60.577 billion.
The Bank of Mozambique, which has kept rates steady this year, said the drop in the August monetary base reflected a decline in currency in circulation, which then dampened the rise in bank reserves. But in annual terms, the monetary base rose by 15.9 percent, or 8.2644 billion meticais.
The central bank also said it's monetary policy committee had decided to increase its sales of foreign currency, in addition to its money market intervention, to reverse the pressure seen in the foreign exchange market.
Mozambique's metical has been depreciating since October 2014 and its decline steepened in August. Today the metical was trading at 43.16 to the U.S. dollar, down 23 percent this year.
In August alone, the central bank said the metical depreciated by 3.70 percent against the dollar in the interbank segment for an annual depreciation of 31.50 percent based on a closing rate of 40.12.
"It should be noted that the exchange rate pressure accentuated in early September, with the price of the dollar reaching an average of 44.80 MT on the 10th," the central bank said with regard to commercial bank's business with their customers.
It attributed the decline of the metical to the strengthening U.S. dollar, a persistent fall in international commodity prices that impacts the country's balance of payments' position, plus shocks to the economy.
Mozambique's Net International Reserves in August dropped by US$73.2 million to $2.5594 billion, a balance that equals 3.76 months of import cover.
Mozambique's inflation rate rose to 2.28 percent in August from 1.5 percent in July, mainly due to higher food prices.