The Bank of Mauritius (BoM) has intervened in the domestic foreign exchange market to sell $ 25 million at Rs. 43.15, yesterday. Has the central bank finally decided to respond to the public outcry on the rise in commodities prices? Yesterday, in Vacoas, the PM has said that he is willing to sacrifice projects. This represents a shift in his communication. From denial mode, he’s beginning to open up on how government is managing the crisis.
Yesterday, Friday 08, the BoM announced that it is selling $25 million on the domestic market at Rs. 43.15, a price that will undoubtedly slow down the depreciation of the Mauritian Rupee, at least for the time being. On the eve of this intervention in this domestic foreign exchange market, the U.S dollar was sold above Rs. 45.15, according to data available on the central bank’s website, generates criticisms from all sides of the political spectrum.
In Parliament this week, the Leader of the Opposition, Xavier Luc Duval, pressed the Minister of Finance and Economic Development, Dr. Renganaden Padayachy, to shield vulnerable families from the rapid rise in commodities prices by handling financial handouts and supermarket vouchers. In his reply, the Minister argued that the rupee depreciation was due to the economic crisis caused by the pandemic. “Since 2019, the country has suffered from a shortfall of $3 billion, representing a 33% fall in income in foreign currencies. This situation has exerted unprecedented pressure on the Mauritian Rupee. Despite the Bank of Mauritius interventions, we have registered a depreciation of our currency.”
The Minister added that the Leader of the Opposition’s proposals, including tax removal on fuel, is being considered by his Ministry to fight off inflation. All sides of the political spectrum, including the government, agree that immediate measures must be taken to relieve consumers.
The Consumer Price Index Report published by Statistics Mauritius on Thursday 07 shows that Headline Inflation reached 6.0% for the last 12 months ended March 2022. Year on Year Inflation reached 10.7% in March 2022.
The Friday 08 Bank of Mauritius intervention is likely to be felt in a month once the new USD price impacts freight and other import costs.
