Metical keeps falling – Carta | Club of Mozambique

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Metical keeps falling – Carta

3:24 CAT | 11 Dec 2020

Photo: Banco de Moçambique

On Wednesday (December 9), the Bank of Mozambique inaugurated a new Praça do Metical in Beira, Sofala province, the first in the country and the first of the projected inauguration of ‘Metical Squares’ in all provincial capitals.

Speaking on the occasion, Governor of the Bank of Mozambique Rogério Zandamela said that the ‘Metical Squares’ aimed to extol the national currency, one of the most important symbols of our country’s economic stability.

The fact is that, while we sing the national currency’s praises, it keeps depreciating against the US dollar, one Metical at a time.

Also read: Behold: The new Praça do Metical in Beira – videos and photos

If a month ago we reported that the US dollar continued to appreciate against the national currency, and showing how, according to the Bank of Mozambique exchange rate of the 5th of November, one US dollar was bought for 72.6 Meticais (two more, selling), in the last few days, the depreciation of the metical has not stopped.

According to the exchange rate this Thursday (10th), our currency yielded another 1.00 Metical in favour of the US dollar. Thus, when buying, 1.00 US dollar is equivalent to 73.6 Meticais and its sale costs 75.1 Meticais.

The depreciation of the metical is not only against the US dollar, but also against other currencies, namely, the Euro and the South African Rand. For example, 1.00 Euro was bought this Thursday at 89.2 Meticais and sold at 91 Meticais, values well above the 83.6 Meticais and 85.4 Meticais of purchase and sale respectively on the 5th of November last.

In the last month, 1.00 Rand cost 4.5 Meticais to buy and 4.6 Meticais to sell, but in the last days it costs 4.9 Meticais to buy and 4.99 to sell.

The reasons for the Metical’s depreciation against other currencies are well known, namely, the weak production of our economy, which leads Mozambique to import a lot (losing currency) while selling little to other countries.

The impact of the ‘hidden debts’ is another reason that placed Mozambique in the ranking of the most indebted countries, a factor that does not attract investors to the country. Bank of Mozambique figures cited in a survey by the Institute of Social and Economic Studies reveal that, if in 2013, Foreign Direct Investment (FDI) in the country reached US$7 billion (its highest value), in the following years, FDI declined, and in 2019 stood at below US$3.5 billion.

The crisis caused by the Covid-19 pandemic and the insecurity caused by the terrorist attacks in the province of Cabo Delgado, and by the self-proclaimed Renamo Military Junta in the centre of the country, are other factors which aggravate the Metical’s slippage against other currencies. Not to mention, last but not least, the approaching festive season.

By Evaristo Chilingue

Source: Carta de Moçambique