Mauritian Rupee’s Year-End Outlook

The Mauritian rupee has appreciated against the US dollar in recent months, despite an increase in currency circulation towards the end of the year.

While December typically sees a rise in currency circulation, economist Manisha Dookhony suggests that factors such as year-end bonuses, increased purchases, and business expenses may contribute to this trend.

However, Dookhony believes that currency circulation will not significantly impact the value of the rupee unless tourism plays a role.

The exchange rate between the rupee and the dollar has been favorable to Mauritius, but the differential interest rates between the two countries pose challenges.

With 70% of imports made in dollars, the central bank must intervene in the foreign exchange market to maintain price stability.

The US Federal Reserve has maintained its rates, prompting speculation that the Bank of Mauritius should also hold off on making changes until June, when rates in the US may shift.

The ability of the Bank of Mauritius to protect the rupee will depend on its reserves, which stood at Rs 297.2 billion at the end of November 2023, equivalent to ten months of imports.

Source: Defi Media