The Mozambican metical’s turnaround from being one of Africa’s biggest losers last year to the best performer globally so far in 2016 probably won’t last.
The currency has gained 7 percent against the dollar this year, reversing a 32 percent decline in 2015 that was its biggest drop in two decades. Still, its poised to weaken this year because of slowing Chinese growth and the stronger U.S. dollar, Hanns Spangenberg, senior economist at NKC African Economics, said in an e-mailed response to questions. “The largest pressure on the metical will likely stem from Mozambique’s current account deficit,” he said.
Mozambique’s current account gap, the broadest measure of trade in goods and services, is forecast at 45.3 percent of gross domestic product this year, the highest in the world after Libya and Tuvalu, according to International Monetary Fund data.