VISA challenges exchange rate set by Mozambique’s central bank – Carta

Login

Register

http://www.clubofmozambique.com/

VISA challenges exchange rate set by Mozambique’s central bank – Carta

4:55 CAT | 10 May 2021

FILE - Visa Headquarters

VISA Inc., the American financial services company, is ignoring the exchange rate set by the Bank of Mozambique, the regulator of the national financial system. An economist says that this may be due to the fact that the company suspects the central bank is manipulating the exchange rate.

Despite the metical’s current appreciation, VISA continues to charge 75 meticais per US dollar in transactions, to the dismay of online shoppers.

The value of the US dollar has fallen in recent days due to the effects of monetary policies – and not only those which have been adopted by the Bank of Mozambique. As a consequence, one US dollar now costs 57 meticais, after falling to 75 meticais at the peak of the Covid-19 pandemic.

The sharp appreciation of the metical against the dollar and other currencies, which started at the end of last March, has raised questions, since the coronavirus pandemic, the insecurity and climatic effects have negatively impacted the country’s economic activity, which should not favour the appreciation of the national currency.

Even with the crises, the metical is becoming stronger. This is, to a certain extent, beneficial to the national economy. However, this appreciation is not being recognised by the American company VISA, whose financial services are used in Mozambique and elsewhere in the world.

Headquartered in San Francisco , California, United States of America, VISA – it should be stressed – is not obliged to use the exchange rate determined by the Bank of Mozambique, unlike banks and national financial institutions. But what is worrying is the large difference between the central bank and VISA rates, a gap which is causing distress to Mozambican citizens.

‘Carta’ has heard several complaints from Mozambican citizens who suffered losses after shopping online using VISA services.

“Today I made an online purchase using my Standard Bank credit card, and a strange thing happened. The product cost US$200, but when I went I looked at my balance I realised that the bank had debited 15,891.00 Meticais. I called customer care and was told that VISA, which owns the card, applies a different exchange rate to the one used in our market. That’s fine. But I don’t see much rationality here in Mozambique. The US dollar costs 57 meticais, but when we buy abroad from here, using a bank from here, we’re charged 75 meticais. We are being robbed,” said the source.

Another citizen suffered the same loss, but using another national bank. He said he made online payments by credit card through Millennium Bim, and was also informed that the exchange rate is set by VISA.

“BIM called me and informed me that the rates and the exchange rate are from VISA, not from the bank itself,” reported the source.

In view of this, we contacted the academic and economist João Mosca. He explained that VISA continues to debit 75 meticais per US dollar because it distrusts the exchange rate set by the Bank of Mozambique, allegedly because it is speculative.

“VISA may have noticed that the exchange rate set by the central bank does not reflect the country’s current economic situation. It realised that there may be manipulation of the market, with the injection of foreign exchange allowing the appreciation of the metical.” Mosca said.

VISA is not the only global financial institution that questions the current appreciation of the metical. Fitch Solutions, an international financial rating institution quoted recently by Lusa, gave as its opinion that the national currency is overrated, and its value “does not reflect macroeconomic conditions”. Fitch’s consultants expect the metical to depreciate to around 74 to the dollar by the end of this year.

By Evaristo Chilingue

Source: Carta de Moçambique