June 18 (Bloomberg) -- Mauritius’s rupee weakened the most more than seven months as the central bank bought dollars to increase its reserves, improving the coverage for imports.
The currency of the Indian Ocean island nation depreciated 1.2 percent to 30.5750 per dollar by 2:24 p.m. in Port Louis, the biggest retreat since Nov. 1 on a closing basis. The rupee extended its decline to 4 percent this year, becoming the fourth-worst African performer against the U.S currency after Gambia’s dalasi, Nigeria’s naira and Ghana’s new cedi.
The Bank of Mauritius plans to buy as much as $900 million to increase the imports’ coverage from 4 1/2 months to 6 months, according to Governor Rundheersing Bheenick. For the week through June 15, the Port Louis-based central bank bought $25.1 million from the domestic market, 62 percent more than it did in the previous week, the bank said in statement on its website.
“The decision to increase the reserves is legitimate,” Oumesh Mungroo, a treasurer at Barclays Plc’s Mauritian unit, said in a phone interview from Ebene today. “It’s a substantial amount.”
The process, known as Operation Reserves Reconstitution, “have already started,” Jaywant Pandoo, the head of markets at the central bank, said in an e-mailed response to queries after the market closed June 15. The rebuilding of reserves “will largely depend on the capacity of the market to supply,” he said.
Against the euro, currency of its main trading partner, the rupee weakened 2.1 percent to 38.6328 today, widening its decline this month to 4.3 percent.
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