Mauritius’s central bank will probably maintain “very prudent” monetary policy as the average inflation rate climbs, Bank of Mauritius Governor Rundheersing Bheenick said.
Inflation for the 12 months through June averaged 5.1 percent compared with 4.8 percent a month earlier, Bheenick said in a transcript of an interview published in the Port Louis- based l’Express newspaper today.
“The dynamics are still pointing up, which means that the central bank will have to maintain its very prudent stand.”
The central bank’s Monetary Policy Committee raised the benchmark interest rate twice this year to 5.5 percent. The average inflation rate has climbed from 1.7 percent in June last year after annual inflation accelerated for six months to peak at 7.2 percent in March due to higher food and fuel prices. It was at 6.6 percent in June, according to the Bank of Mauritius. The Indian Ocean island nation is a net importer of food and motor fuels.
Since 2007, the central bank has diversified its currency holdings, moving away from the dollar, euro and pound into commodity currencies such as the Australian dollar, the New Zealand dollar, the Norwegian Krone and the Swedish Krone, Bheenick said.
“We are looking at the South African rand, the renminbi, and Indian and Chinese bonds as well, to diversify our reserves,” he said. “We are diversifying like mad.”
The Mauritian rupee weakened for a second consecutive day, depreciating 0.9 percent to 28.15 against the dollar by 11:40 a.m. in Port Louis.