In early 2021, as monetary policy tightening reversed a multi-year trend of Metical depreciation, the exchange rate vis- -vis the US dollar de facto stabilized. This report discusses elements of the market structure and other drivers of Metical stability since mid-2021. The particularities of Mozambique, a small open economy with an export sector that has a strong foreign currency cost structure, provide important insights into that discussion, as does the structure and development of the Foreign Exchange (FX) market.
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- DOI
- https://doi.org/10.5089/9798400292828.001
- ISBN
- 9798400292828
- ISSN
- 1018-5941
- Issue
- 233
- Pages
- 22
- Published in
- United States of America
- Series
- Working Paper No. 2024/233
- StockNumber
- WPIEA2024233
- Volume
- 2024
Table of Contents
- Contents 4
- Glossary 5
- Identifying Determinants of FX Stability in Mozambique 6
- INTRODUCTION 6
- BACKGROUND AND MARKET DYNAMICS 7
- TRADE AND MARKET FLOWS 10
- PROFILE OF MARKET PARTICIPANTS 11
- FX MARKET LEGAL AND OPERATIONAL FRAMEWORK AND DYNAMICS 14
- POLICYMAKER PREFERENCE 16
- INDICATORS OF EXCHANGE RATE DISEQUILIBRIUM 17
- DISCUSSION 19
- CONCLUSION 19
- References 21
