Africa-Press – Mozambique. For a year now, Mozambique’s national currency, the Metical, has been robust enough to hold its value against other currencies such as the US dollar, the Euro and the Rand.
The metical remains resilient against these currencies not because the country has abandoned its habit of importing to meet the needs resulting from weak domestic production. On the contrary, Mozambique continues to buy more from abroad and export less.
The metical is strong because, when the pandemic arrived, the Bank of Mozambique took monetary policy measures to reverse the depreciation of the national currency, which, at the peak of the crisis, was trading at 75 meticais per dollar.
Among several measures, the central bank injected US$500 million into the national financial market to finance the import of essential goods and services. By introducing that financing line for a period of nine months (from March to December, 2020), the Bank of Mozambique also hoped to reduce fluctuation in the exchange rate and promote price stability of goods and services at the national level.
However, the terms and conditions of the line were not flexible enough to attract entrepreneurs.
At the end of that period, in April 2021, the central bank came up with another idea to save our currency. Instead of making US$500 million available to commercial banks, for them to pass on to businesspeople in order to make imports, the institution announced foreign exchange injections to meet the greater demand for foreign currencies at that time, especially the US dollar.
So, in May 2021 (the following month) US$60 million was made available on the Interbank Foreign Exchange Market. From then on, the stabilisation of the metical began to take shape. Now, one US dollar costs 64 meticais to sell and 63 meticais to buy. The same stabilisation occurred against the Euro and the Rand. According to the daily exchange rate of the Bank of Mozambique, one Euro costs 67 meticais to sell and 66 to buy, and the Rand four meticais (buy and sell).
To the benefit of the economy, according to the Ministry of Economy and Finance (MEF) in its “Medium Term Fiscal Scenario, 2023-2025” bulletin, the metical will remain stable against other currencies over the next three years.
“The exchange rate of the Metical against the main currencies (USD, ZAR, EURO), is expected to continue to evolve in a controlled manner and to maintain its stability in line with the objectives of exchange rate policy,” the document, recently published by the MEF, reads.
By
Evaristo Chilingue
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