IMF Working Papers

Identifying Determinants of FX Stability in Mozambique

By Samuel Mann, Alexis Meyer-Cirkel

November 8, 2024

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Format: Chicago

Samuel Mann, and Alexis Meyer-Cirkel. "Identifying Determinants of FX Stability in Mozambique", IMF Working Papers 2024, 233 (2024), accessed November 21, 2024, https://doi.org/10.5089/9798400292828.001

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Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

In early 2021, as monetary policy tightening reversed a multi-year trend of Metical depreciation, the exchange rate vis-à-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.

Keywords: Central Bank Policy, Exchange Rate Regimes, Foreign Exchange Stability, FX Market Structure, Market Intervention, Mozambique

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