(Bloomberg) -- Mauritius’ new central bank Governor Rama Sithanen says his first priorities are combating the slide of the rupee and fixing a shortage of foreign currency in the domestic market.
A former finance minister in the Indian Ocean island nation, Sithanen on Saturday starts a three-year term at the helm of Bank of Mauritius, replacing Harvesh Seegolam.
Sithanen is an economist trained at the London School of Economics and also holds a PhD in political science. His appointment came at the recommendation of Prime Minister Navinchandra Ramgoolam, whose Alliance du Changement won a landslide victory at the Nov. 10 general elections.
The central bank must do “everything we can to combat depreciation of the rupee, which has an impact on the purchasing power, cost of living and inflation,” Sithanen, 70, said in an interview with Port Louis-based Le Défi Plus.
Mauritius is a net importer of food and fuel, with its trade deficit set to reach a record of 195 billion rupees ($4.13 billion) this year, 8.3% higher than in 2023.
Since July, the central bank has been intervening on the market in response to shortages and with a view to supporting the currency, with the last related transaction made on Oct. 21.
The rupee fell by about 1.7% against the dollar this week, the most since mid-July, bringing losses for the year to nearly 7%. Inflation accelerated to 3.4% in October, the highest since April.
In September, the monetary policy committee cut its key rate by 50 basis points, to 4%. A new monetary policy framework has been in place since January 2023, including an inflation target of 2% to 5%.
“We will conduct an audit of the situation with regard to reserves and monetary policy,” Sithanen said. “It’s about slowing the depreciation of the rupee and determining the contingent liabilities of the Bank of Mauritius.”
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