Mozambique: Metical continues to fall against US dollar

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Mozambique: Metical continues to fall against US dollar

12:21 CAT | 26 May 2016

According to the Bank of Mozambique’s weekly bulletin on the main economic indicators, the metical continued to depreciate against the dollar in all segments of the domestic foreign exchange market in the first half of the month.

In two weeks, the metical recorded losses against the dollar of 2.05 percent in the interbank foreign exchange market (for transactions between the central bank and commercial banks), 2.27 percent in foreign exchange houses and 1.91 percent in commercial banks, while the differential between the average rate at commercial banks and the interbank foreign exchange market rate fell 14 basis points.

In the same period, the metical depreciated against the euro by 1.19 percent but appreciated against South African rand by 4.79 percent.

The depreciation of the metical is one of the factors that determines the general increase of prices of goods and services, since it makes imports more expensive as more meticais are needed to make purchases abroad in a context of weak production levels and high dependence on imports.

Because of the metical’s sharp depreciation, many companies are facing high raw material import costs and recording significant declines in revenue.

For several years in the past, the dollar traded at 30.00 meticais. Until May 15, the metical was at 54.30 meticais in the interbank foreign exchange market, at 55.00 meticais in commercial banks and at 60.45 meticais in currency exchange houses.

Source: AIM