Banks in Mauritius try to maintain stability with the Euro, as per BoM guidance under the previous Govt. Since the US Dollar dropped against the Euro during 1-16 April 2025, it thus also fell against the rupee, as can be seen in the second graph. Between 2 April and 11 April the dollar fell by 4.2% against the rupee. The BoM then intervened on Monday 14 April to strengthen the dollar by about one rupee.
An appreciating rupee reduces the valuation gains on BoM external reserves and also reduces the competitiveness of Mauritian exports. Moreover, foreign currency scarcity remains acute, and a weaker dollar, that is stronger rupee, does not reflect true market conditions. BoM was right in intervening to strengthen the dollar, i.e., depreciate the rupee. The US dollar is still 1.3% down during this month.
With BoM intervention, the Euro rose even more by about Rs 1.50, reaching close to Rs 52.00, as shown in the third graph below.
The forex exchange shortage remains severe, and stabilising the rupee, let alone allowing it to appreciate, is not compatible with forex market conditions.
The export sector is subject to an adverse shock following the imposition of a 10% US export tariff, and requires rupee depreciation to improve its competitiveness. This will also relieve Govt of having to provide financial support to the export sector through the wage support scheme, and freight subsidies.
In our representations to the US regarding a review of the reciprocal tariff of 40%, Mauritius cannot continue to provide these export subsidies. Export subsidies, which are considered unfair trade practices, will undermine our case for a US tariff review.
Are these representations truly active or are they just mere bla blas à la NCR!
