Mozambique’s foreign reserves reduce by US$46 million in the 1st half of the month

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Mozambique’s foreign reserves reduce by US$46 million in the 1st half of the month

12:19 CAT | 03 May 2016

The Net International Reserves – money available in the economy to conduct external commitments such as making imports and debt payments – continue to reduce, reports O País.

Preliminary Bank of Mozambique information points to a reduction of net international reserves worth US$46 million in the first half of April, down to US$1.8046 billion.

According to the summary of the financial situation in the half of 1 to 15 April 2016, recently published by the Bank of Mozambique, the reduction observed is a result of external debt payment in the amount of US$37.4 million , net sales of US$16, 8 million to commercial banks in the Interbank foreign exchange Market (MCI – exchange transactions between commercial banks and the Central Bank), and net transfers of foreign currency abroad ordered by commercial banks amounting to US$18.1 million.

Nevertheless, there were factors that determined the entry of foreign currency, but not enough to prevent a drop in International Reserves. The document indicates the entrance of US$12.9 million in favour of the State and foreign exchange gains of US$10.2 million which it says are linked to the weakening of the dollar in international markets.

In recent months, the International Reserves suffered a significant reduction due to the Bank of Mozambique’s measures aimed at curbing the negative impact of the depreciation of the metical against the US dollar.

The reduction of foreign reserves reduces the capacity of the economy to import goods and services. The goal set by the government for this year had been that the Net International Reserves would reach US$2 251 million, corresponding to 4.3 months of imports coverage, excluding megaprojects.

Source: O País