BoM Faces $550M Currency Crisis Amid Car Import & STC Demands

The Bank of Mauritius has been hit by a significant outflow of foreign currency, totalling a staggering $550 million in recent months. This financial strain is largely due to two major events: a surge in new car imports and a substantial transaction by the State Trading Corporation (STC).

Key Financial Blows

The first blow came in June with a massive $200 million exodus to cover the import of over 6,000 new cars.

This wave of imports was a direct result of “pre- and post-budget frenzy,” causing a sudden and significant demand for foreign exchange.

Hard on the heels of the car import frenzy, the State Trading Corporation (STC) presented the Bank of Mauritius with a hefty $350 million foreign currency bill.

While this transaction was expected to be settled in rupees, the foreign client demanded “hard currency,” putting further pressure on the central bank’s reserves.

The combined impact of these two events highlights a severe challenge in the management of the nation’s foreign exchange.

The Central Bank’s ability to maintain stable currency reserves is under scrutiny as it navigates these unexpected and large-scale demands.

Source: Le Mauricien