(Bloomberg) -- Mauritius’s central bank governor said the institution stands ready to intervene in the foreign currency market after the rupee slipped to a new record low against the dollar.
The rupee declined to 49.1666 rupees to the dollar on Wednesday, the lowest on a closing basis since Bloomberg started tracking the currency. It was trading 0.4% stronger Thursday at 12:15 p.m. local time.
“I wish to reassure the market that the Bank of Mauritius will closely monitor the situation and that it stands ready to intervene to ensure orderly supply of foreign currency,” Harvesh Seegolam told reporters Thursday in the capital, Port Louis, at a briefing where he announced that the benchmark interest rate will remain unchanged at 4.5%.
The bank on Monday intervened in the domestic foreign exchange market selling $50 million at 46.76 rupees to the dollar. “The bank is not out of fire power” to intervene in the market, Seegolam said.
International gross reserves stood at $8.2 billion as at end-June 2024, enough to cover 12.9 months of import cover.
Dollar demand is being fueled by high volume of transactions with the financial sector, importers of goods and tourism operators, the governor said.
The tourism-dependent nation is a net importer of food, fuels and equipment and will likely see its trade deficit widen to almost 200 billion rupees ($4.1 billion) this year, according to the statistics agency.
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