Mozambique’s Net International Reserves rose to $3.740 billion in December after two months of declines, the highest since September. The reserves are crucial for international payments and have recently been expanded in response to domestic market pressures. The Bank of Mozambique adjusted mandatory reserve requirements to foster economic liquidity and support growth.
In December, Mozambique’s Net International Reserves (NIR) witnessed an increase, achieving $3.740 billion (€3.453 billion), marking a recovery after two consecutive months of decline. This increase represents the highest level since September, according to official data provided by the Bank of Mozambique.
Previously, during October and November, Mozambique’s foreign currency reserves had decreased to €3.682 billion (€3.400 billion). However, in December, these reserves rose by 1.5%. The NIR at the end of September stood at $3.762 billion (€3.474 billion), enough to cover approximately three months of import requirements.
The reserves are crucial for ensuring that companies can pay for goods and services abroad. Remarkably, by January 2024, these reserves grew further, reaching almost €3.601 billion (€3.325 billion), marking the highest level since September 2021. In July, the reserves had peaked at €3.807 billion (€3.515 billion), a three-year record.
Rogério Zandamela, the governor of the Bank of Mozambique, assured on 8 November that the country’s foreign currency reserves were in a comfortable position. He emphasized, “We won’t burn reserves and we’re not burning reserves,” clarifying the bank’s outlook on the medium-term economic prospects of the nation.
In light of a foreign currency shortage in the domestic market, local businesses have urged the central bank to relax the mandatory reserve requirements for foreign currency. Currently, banks are mandated to reserve 39.5% of their foreign currency assets, a significant increase from 11.5% in 2022. This amendment was instituted on 27 January when the Bank’s Monetary Policy Committee reduced reserve coefficients in both national and foreign currencies to 29.00% and 29.50%, respectively, to enhance liquidity and revive the economy’s productive capacity.
In conclusion, Mozambique’s Net International Reserves have shown a notable increase in December after two months of decline, highlighting a recovery in the nation’s economic stability. The reserves, crucial for international payments, are at a viable level to support economic activities. In response to recent pressures from businesses for increased liquidity, the central bank adjusted the mandatory reserve requirements, aiming to bolster economic capacity and availability of goods and services.
Original Source: clubofmozambique.com
