Mauritius apex bank to offer currency swaps

Mauritius's central bank will offer spot-to-three-month forward swap transactions in dollars, euros and pounds to counter a lack of liquidity in the foreign exchange market.

Mauritian economy analysts warned the intervention would be inadequate as long as the Indian Ocean island's benchmark lending rate remained attractive to investors at 5.75 per cent.

"The bank is undertaking swap transactions with a view to injecting liquidity in the market and thereby avoiding the build-up of uncertainties that would have financial stability implications," it said in a statement issued late on Tuesday.

The Mauritius rupee has appreciated steadily since hitting a March low of 34.45 to the dollar. The central bank said the spot market for foreign currencies was experiencing volatility as a result of reduced volumes of transactions, exacerbating underlying uncertainties. It partly blamed the unwillingness of the market to hedge foreign exchange positions.

 

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