Bank of Mauritius Injects $15M Into Forex Market at Rs 46.75

The Bank of Mauritius (BoM), the country's central bank, injected 15 million US dollars into the foreign exchange market on Thursday 5 November, at a rate of Rs 46.75 to the dollar. This was the institution's 11th such intervention since the start of the year, bringing the cumulative total of dollar sales to 155 million US dollars in 2024.

Previous interventions took place on 14 January, 9 March, 16 April and 12 June, among other dates across the year, indicating a pattern of regular, spaced-out operations rather than emergency one-off moves.

Forex interventions by a central bank involve selling foreign currency reserves, in this case US dollars, directly into the local market. The goal is typically to stabilise or support the value of the domestic currency, the Mauritian rupee, by increasing the supply of dollars available to commercial banks and businesses that need them for imports, debt repayments or other international transactions.

When the rupee weakens against the dollar, imported goods such as fuel, food commodities and manufactured products become more expensive for Mauritians. Keeping the exchange rate within a manageable range helps contain inflationary pressure on everyday costs.

The BoM does not operate a fixed exchange rate. Instead, it monitors conditions in the local interbank market and steps in when it judges that volatility or one-sided pressure requires a corrective supply of foreign currency. The rate of Rs 46.75 per dollar at which Thursday's sale was conducted gives traders and businesses a reference point for the central bank's current tolerance level.

With 11 interventions already completed and roughly two months remaining in the calendar year, the pace of operations in 2024 suggests sustained demand for dollars in the local market, likely driven by a combination of import costs, global dollar strength and domestic economic activity.

What this means: For ordinary Mauritians, a stable rupee-dollar rate matters most through its effect on prices at the pump and in supermarkets, since Mauritius imports a large share of its fuel and food. For businesses with foreign currency obligations, the BoM's willingness to supply dollars at a predictable rate reduces exchange rate risk. Investors and exporters will be watching whether the central bank has sufficient reserves to maintain this pace of support through the end of the year.

Source: Le Defi Media