Mauritius plans to foreign currency diversify reserves to add Chinese yuan and Indian rupee

The Bank of Mauritius is seeking to limit its foreign reserve exposure to the U.S. dollar and the euro and will diversify to include more holding from trade partners such as China, India and South Africa.

“We are busy looking at the possibility of buying Chinese bonds, also South African and Indian bonds just to diversify away from too much dependence on the well-known euro and dollar currencies,” Governor Rundheersing Bheenick told reporters in Kenya’s capital Nairobi today.

The Port Louis-based central bank has doubled its reserves to $2.9 billion since 2006, and “furiously” included new commodity currencies such as the Canadian, Australian and New Zealand dollars, as well as Norwegian kroner and Swedish kronor, he said. That added to reserves denominated in pounds, euros and U.S. dollars, Bheenick said.

Investor confidence has dropped after the U.S. sovereign debt rating was cut by Standard & Poor’s on Aug. 5, and amid worsening public debt problems in Europe.

“For the immediate future all of us should try to protect our economies from the worst repercussions,” Bheenick said. “One of them is to make sure we don’t get too exposed to these particular reserve currencies.”

Mauritius, an Indian Ocean island with a population of 1.3 million, is a net importer of food and fuels, with 67 percent of its import bills denominated in dollars. Europe is the country’s main trading partner for tourism and textiles, its two main sources of foreign currency revenue, according to the Central Statistics Office.

“We want to move away from dollar-based trade into yuan- based trading with China and rupee-based trading with India. Likewise with the South Africans with whom we trade a lot,” Bheenick said. “We want to have direct trading, trying to bypass the dollar channel and the euro channel.”