Christmas Retail Crisis: Currency Shortage Threatens Prices and Supply

The supply of essential goods for the festive season is under severe threat, with consumer prices set to soar, as a critical shortage of foreign currency grips the retail sector, according to the General Retailers Association (GRA).

The GRA has sounded the alarm that limited access to foreign exchange is jeopardising the stock of toys, clothing, electronics, and foodstuffs needed for the busy year-end period.

Importers are struggling to pay international suppliers, leading to delays in payments and deliveries, increased import costs, and an imminent “inflationary pressure that the consumer will not fail to feel,” warned GRA President Dominique Filleul.

Impact and Delays

Mr. Filleul explained that the end of the year is traditionally a period of high demand for foreign currency as traders settle accounts with overseas suppliers.

He stated that the current lack of currency availability is leading to delays in the receipt of goods and forcing some retailers to use more expensive channels for international payments, mechanically increasing their import costs.

These additional costs are inevitably passed on to the final consumer as price hikes, a phenomenon the GRA anticipates with deep concern.

The association has already formally approached the Bank of Mauritius to alert them to the repercussions of the foreign exchange shortfall on imports during this critical period.

With over 80 per cent of consumer products being imported, the situation directly endangers the availability and price stability of goods on the local market.

Paradox and Recommendations

Paradoxically, the currency shortage comes despite a record tourist influx, surpassing a million visitors. Mr. Filleul acknowledged this paradox, but explained that not all tourist revenue transits through the local banking system.

A significant portion remains abroad via international booking platforms and hotel groups that centralise payments outside the country.

Further exacerbating the issue is the prudent attitude of economic operators and households, who are choosing to retain or repatriate their foreign currency more slowly, reducing its natural flow in the local market.

Furthermore, a substantial portion of available reserves is being absorbed by the high demand for foreign exchange from the State Trading Corporation and the Central Electricity Board to finance petroleum product imports.

To resolve the impasse, the GRA is advocating for a return to transparency and fluidity in the foreign exchange market, urging the Bank of Mauritius to provide clear policy guidance to commercial banks to prevent “discretionary or inconsistent practice” in currency distribution.

Mr. Filleul stressed the importance of restoring confidence so operators feel they can access the necessary foreign exchange fairly.

The GRA also called for a regular dialogue between authorities and economic stakeholders to better identify needs and adapt measures to the reality on the ground, insisting on the “strategic importance of the trade sector in preserving economic stability and employment.”

Source: Defi Media