Further Depreciation of Metical seems likely
The BMI Research consultancy said yesterday that it expected Mozambique’s national currency to depreciate in the medium term, to 64 meticais to the US dollar this year and 72 meticais in 2019. “In the medium and long-term, we think that the currency will depreciate against the dollar and we are predicting, at the end of 2018 and 2019, levels of 70 and 74, respectively,” a note on monetary policy of Mozambique reads, showing also average values of 64 and 72 for this year and the next.
Analysts also say that “GDP growth will remain below the average of the last decade” and that the country will remain excluded from international financial markets. Analysts at the Fitch’s rating agency group consultancy also write that Mozambique’s central bank has sufficient reserves to cover any metical devaluation pressures resulting from deterioration in the balance of trade.
“In case the Bank of Mozambique is more lenient in monetary policy than we currently anticipate, due to lower-than-expected growth and faster inflation, the metical may weaken even more sharply,” the analysts write. Last week, the Mozambican currency accumulated new losses against the US Dollar and has now dropped around three meticais in seven weeks, according to central bank average exchange rates reported by Lusa.
The US dollar is used as the basis for calculating the exchange rates for other currencies in Mozambique. Last week, the US dollar was bought on average at 61.16 meticais, 61 metical cents more expensive than the previous week. Sale was made at 62.38 meticais for every dollar, 62 metical cents more. The daily average purchase price of the US dollar ranged between 60.94 and 61.35 meticais, while the sale price ranged between 62.15 and 62.58 meticais.