Mauritius May Keep Benchmark Interest Rate Unchanged
Mauritius’s central bank will probably leave its benchmark interest rate unchanged for a second meeting to help curb price pressures and bolster the currency.
The Monetary Policy Committee, led by Governor Rundheersing Bheenick, will hold the repo rate at 4.9 percent, according to six out of nine economists surveyed by Bloomberg. One analyst predicted a 10 basis-point increase, while two forecast a rate cut. The Port Louis-based bank is due to announce the decision on its website at 6 p.m. local time today.
Inflation in the Indian Ocean island nation may accelerate from 3.7 percent in August as the currency weakens, food prices climb to records and fuel costs jump. The rupee has slumped 4.1 percent against the dollar since April 1. Mauritius, with a population of about 1.3 million people, is a net importer of food and fuels.
“A cut will do more harm than good,” Swadicq Nuthay, an economist at Axys Capital Management Ltd. in Port Louis, said in a phone interview on Sept. 21. “We already have a negative return on rupee-denominated assets.” Mauritius “is poised for a higher inflation rate as the rupee is weakening,” he said.
The rupee strengthened 0.7 percent to 30.05 a dollar by 1:30 p.m. in Port Louis, the capital. A close at this level will be the highest since Sept. 18, according to data compiled by Bloomberg.
Oil imports accounted for 23 percent of foreign purchases in the six months through June, Statistics Mauritius said on Aug. 28.
Policy makers have reduced borrowing costs twice since December to support economic growth as a debt crisis in Europe, the island nation’s biggest trading partner, cuts export revenue. Tourism and textiles are Mauritius’s biggest source of foreign currency income.
The $10 billion economy will probably expand at its slowest pace since 2009 this year at 3.1 percent, said Gilbert Gnany, group chief strategy officer at Mauritius Commercial Bank (MCB), the largest lender by market value.
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