Bank of Mauritius Sells $270 Million to Local Banks

Between July 1 and September 18, the Bank of Mauritius (BoM) sold $270 million to local banks as part of its efforts to manage excess rupees in the banking system. The central bank has indicated that inflation is expected to reach approximately 4.0% by the end of 2024.

In recent months, the Bank of Mauritius has stepped up its open market operations to regulate the liquidity in the financial system.

The BoM has conducted regular interventions in the foreign exchange market during the third quarter of 2024, adjusting its issuances with maturities of 91 days, 182 days, and 364 days.

This information comes from a recent communiqué published on the BoM’s website.

Since the last Monetary Policy Committee (MPC) meeting, held on September 13, 2024, the BoM has issued bonds valued at a total of Rs 12.85 billion, while also conducting weekly issuances of Rs 1 billion maturing over seven days.

These measures aimed to control liquidity and absorb the surplus rupees in the market.

The BoM noted that its foreign exchange interventions effectively absorbed the equivalent of Rs 12.5 billion.

During the analyzed period, the BoM’s outstanding securities decreased from Rs 144.8 billion on July 11, 2024, to Rs 135.8 billion by September 13, 2024.

Additionally, the Bank intervened in the domestic foreign exchange market to assist importers in building inventories ahead of the year-end.

Notably, the rupee has appreciated by 2.2% against the US dollar since the last MPC meeting.

Inflation Outlook

The Bank of Mauritius projected a continuing decline in inflation, which has remained within the central bank’s target range of 2 to 5% for the past four months.

The BoM anticipated that inflation will approach the median target, encouraged by favorable global commodity price conditions and well-anchored medium-term inflation expectations.

“Inflation is expected to reach around 4.0% by the end of 2024,” stated the BoM.

However, the Bank acknowledged that inflation prospects are subject to risks in both directions.

There are upward risks associated with supply shocks due to geopolitical or climatic events, while downward risks could emerge from a further decline in global commodity prices.

The Bank believed that the balance of risks leans more towards a decrease than an increase.

Tourism Sector Growth

The Mauritian economy is expected to remain resilient in 2024, spurred by strong growth across key sectors and a positive budget impact.

The tourism sector is projected to maintain its robust performance, with a target of 1.4 million visitor arrivals anticipated for 2024.

This influx is expected to positively influence interconnected sectors, including trade, transport, and agriculture.

Sustainable Growth in Construction and Finance

The construction sector is likely to benefit from the development of social housing units and the expansion of road infrastructure networks.

Meanwhile, the financial sector will continue to grow as authorities consolidate efforts to strengthen the global reputation of the Mauritius International Financial Centre.

Real GDP Growth Forecast

On the spending front, aggregate demand is expected to be bolstered by an increase in household consumption driven by wage increases and various policy supports announced in the 2024-25 budget.

This upsurge, coupled with dynamic investment from large-scale public and private sector projects, will contribute to a positive fiscal impulse.

The Bank of Mauritius has maintained its real GDP growth forecast at 6.5% for the year.

Source: Defi Media