BoM spends Rs 3.5 billion on foreign exchange in May to fight rupee appreciation
Besides fighting against the appreciation of the rupee, the intervention of the Bank on the foreign exchange market aims at increasing the reserves of the country. (Image: Money MSN)
The central bank of Mauritius bought a total of 47.4 million US dollars and 51.4 million Euros in the last month for approximately Rs 3.5 billion.
The Bank of Mauritius (BoM) paid out around Rs 1.4 billion and Rs 2.1 billion to purchase dollars and euros respectively, as it continued to combat rupee appreciation.
From April 28, 2014 to May 2, 2014, BoM used Rs 349.5 million to buy US dollars at a rate ranging between Rs 29.95 and Rs 30, while Rs 627.2 million was spent on buying euro at a rate ranging between Rs 41.50 and Rs 41.55.
However, it was in the second week of May, from May 5, 2014 to May 9, 2014 that the central bank was most active. It spent a whopping Rs 858.8 million on purchasing US dollars and another Rs 581.4 million on the Euro. The price for the American dollar was down in the range of Rs 29.88 and Rs 29.94, while for the Euro it ranged between Rs 41.49 and Rs 41.62.
The prices of both currencies were on the lower side, with the US dollar especially coming cheap, under Rs 30, prompting higher purchases by the Bank of Mauritius.
Between May 12, and May 16, 2014, only Rs 30.1 million spent on the dollar and Rs 261.8 million for the euro. The dollar was just under the Rs 31-mark while the euro was marginally under Rs 42 through the course of the week.
For the fourth week of the same month, May 19, 2014 to May 23, 2014, Rs 135.7 million was spent on US dollars ranging in price between Rs 30.15 and Rs 30.20 while the bank spent Rs 344.7 million to buy euros, with prices fluctuating between Rs 41.22 and Rs 41.30.
Finally, during the last week from May 26, 2014 and May 30, 2014, the Bank purchased 1.5 million dollars for an estimated sum of Rs 45.3 million as prices hovered over the Rs 30 mark. As for the euro, the central bank purchased 7.6 million euros, spending an amount of Rs 313.3 million as price for a Euro ranged from Rs 41.21 to Rs 41.22.
Besides fighting against the appreciation of the rupee, the intervention of the Bank on the foreign exchange market aims at increasing the reserves of the country.
The objective is to achieve six months of import within the framework of the national strategy of Operation Reserve Reconstitution (ORR).
Indeed at the end of April, the country had reserves equivalent to 5.8 months of import. Compared to May 2013, when the reserves were equivalent to 5.3 months of import, it represented an increase of 9.4%.
At the speed and efficacy of the interventions of the BoM, the objective of six months may already have been reached by the end of May, or otherwise at the latest, it can reasonably be expected to be achieved in June.