Business
Rs 119 Billion Milestone: Central Bank Instruments Hit Record High in 7 Days
The Bank of Mauritius (BoM) has significantly ramped up its presence in the financial market, with the total value of instruments in circulation soaring to Rs 119.0 billion as of October 17.
The central bank’s weekly report on open market operations revealed a substantial increase from Rs 116.2 billion on October 10, indicating a move to better manage liquidity within the banking system.
The primary driver of this increase was a Rs 2 billion rise in the outstanding balance of short-term BoM Bills, which climbed from Rs 29.99 billion to Rs 31.99 billion. This increase marks the bank’s active effort to raise additional funds from the market.
Active Liquidity Management
The central bank’s open market operations are a key tool for managing the amount of liquidity in the banking system, which in turn helps to stabilise interest rates and the exchange rate of the rupee.
Another significant movement indicating market liquidity absorption was a rise in banks’ overnight deposits with the BoM, via the Overnight Deposit Facility (ODF).
These deposits rose from Rs 53 billion to Rs 55.8 billion. This means banks with temporary excess liquidity placed it with the BoM for a day, suggesting the institution successfully absorbed a temporary liquidity surplus.
Furthermore, the use of the ODF fluctuated between Rs 55.8 billion and Rs 60.3 billion over the past week.
Other Key Developments
| Instrument | Previous Outstanding (Rs bn) | Current Outstanding (Rs bn) | Change (Rs bn) | Notes |
| BoM Bills | 29.99 | 31.99 | +2.00 | Main driver of the overall increase. |
| BoM Notes | 20.00 | 18.00 | -2.00 | Certain titles matured and were not renewed. |
| Emerald Jubilee Bonds (5-year) | Slightly higher than 7.31 | 7.31 | Slight decrease | Receded slightly. |
| BoM Bonds (Long-term) | 5.9 | 5.9 | 0.00 | Remained stable. |
In contrast to the increase in Bills, the outstanding amount of BoM Notes decreased from Rs 20 billion to Rs 18 billion, as some of these titles reached maturity and were not renewed.
Forex Intervention
Separately, the BoM intervened in the foreign exchange market on October 16, injecting USD 15 million to mitigate fluctuations and support the rupee’s stability amid persistent currency pressures.
In summary, the BoM has maintained a prudent management approach to liquidity, using a combination of instrument issuance and foreign exchange market intervention to preserve monetary balance and confidence in the rupee.
An invitation to tender for Rs 4 billion of 182-day BoM Bills was also launched on October 15.
Source: l’Express
