Currency Economy Finance Forex Government Mozambique

Metical, Mozambique’s currency, turns 40

The metical today marks 40 years of existence since it replaced the Mozambican Escudo in 1980. Depreciation in relation to the main currencies remains one of the national currency’s most marked characteristics.

The metical replaced the colonial ‘escudo de Moçambique’ on 16 June 1980. Since then, the country’s official currency has undergone several transformations, one of the main ones in 2006 with the entry into circulation of the “metical of the new family”, with the previous denominations divided by a thousand, that is 1000 meticais = 1 metical.

More than 10 years after the entry into circulation of the “new family” and the departure of the old one, several other characteristics have also marked the national currency. One of the biggest concerns is the depreciation against the main world currencies such as the dollar, and, in Africa, the rand.

“Forty years of the metical is something to praise. But in terms of utility, you would better leave it. It doesn’t bear talking about,” says Felizardo Botão, who works in changing the national currency into the South African rand and vice versa.

“The currency is not appreciating. For example, for those of us who buy products to resell, it has been complicated. Our money is depreciating,” Cardoso Lourenço, a vendor in the Xiquelene market in Maputo, notes.

“In fact, every effort should be made to return our currency to the strength it once had,” said António Cumbe, a salesman at a butcher in the capital’s Mercado Central.

In view of the fall in the metical’s value in recent years, economist Elcídio Bachita points to combined factors.

“The depreciation of the metical is associated with the acute deficit in the country’s balance of payments. This situation that affects the current account, which is why the depreciation is seen, which is also exacerbated by the outbreak of the coronavirus that is also causing restrictions on exports, namely of commodities and agricultural production goods to other countries,” he explains.

Despite these striking characteristics, the government says that it is implementing measures aimed at promoting the national currency.

“We have been working as a government with the our currency on ‘meticalisation’ and respect for the national currency,” Minister of Industry and Trade Carlos Mesquita says.

The minister explains that actions have been developed. The Ministry of Industry and Trade, for example, has worked in border areas where the Malawian kwacha is dominant, explaining the necessity of ‘meticalisation’ which would favour currency stabilisation.

Nevertheless, the metical’s 40th anniversary comes in the middle of the coronavirus pandemic and, although the various studies do not point with any clarity about the currency being a vehicle for transmitting the disease, economist Bachita says it is time for the country to start thinking about using electronic money.

“There is a need, in fact, to maximise this form of payment. I think our country has already made progress in this direction. These electronic platforms allow for some expansion of financial services at national level, particularly in rural areas where the majority of the population does not have access to financial services,” the economist notes.

By Romeu Carlos

Source: O País via Club of Mozambique

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