The Bank of Mozambique (BdM) has maintained the limit on the global long foreign exchange position of credit institutions at 2% of own funds, formally embedding into its permanent prudential framework a restriction that had been in force on an exceptional basis since August 2025.
The measure is set out in Notice No. 5/GBM/2026, dated 28 July, which amends the Regulation on Prudential Ratios and Limits for Credit Institutions. Reviewed on Thursday (13) by Diário Económico, the notice entered into force on 3 August.
Under the new provisions, banks may not carry, at the close of each business day, a global long foreign exchange position exceeding 2% of their own funds, while the global short position remains capped at 20%.
For each individual foreign currency, the long position may not exceed 1% of own funds, and the short position is limited to 10%.
Although the limits are now formally incorporated into the prudential regulation, they do not represent a fresh reduction in the foreign exchange exposure permitted to commercial banks.
On 1 August 2025, the Bank of Mozambique had already approved, through Notice No. 4/GBM/2025, an exceptional regime establishing exactly the same thresholds: 2% for the global long foreign exchange position, 20% for the short, 1% for the long position per currency, and 10% for the short.
The key difference lies in the nature of the measure. The regime adopted in 2025 carried a validity period of 365 days, whereas the new notice directly amends the 2017 Regulation on Prudential Ratios and Limits for Credit Institutions without setting a specific expiry date for the limits.
In practice, the reduction of the global long foreign exchange position from 20% to 2% occurred in August 2025. The new notice consolidates that change within the general prudential framework applicable to the banking system.
Before the exceptional regime was introduced, the 2017 regulation stipulated that credit institutions could not hold a global foreign exchange position exceeding 20% of own funds, nor a position in any single foreign currency exceeding 10%, without distinguishing between long and short positions.
A long foreign exchange position arises when an institution’s assets denominated in foreign currency exceed its corresponding liabilities, generating a net positive exposure to foreign exchange.
By capping this position at 2% of own funds, the Bank of Mozambique restricts the scope for financial institutions to accumulate significant net foreign currency holdings on their balance sheets.
The central bank justifies the change by citing the need to align foreign exchange position limits with the ‘dynamics of the financial market and the national economy’.
The institution also considers that the measure contributes to strengthening the prudential framework of the banking system and to foreign exchange risk management that is better suited to current market conditions.
The decision comes at a time when access to foreign currency remains one of the foremost concerns of Mozambique’s private sector, as numerous companies face difficulties financing imports, procuring raw materials, and meeting obligations to foreign suppliers.
The Confederation of Economic Associations of Mozambique (CTA) has repeatedly flagged the impact of the foreign currency shortage on business activity, going so far as to classify the situation, towards the end of 2025, as an ‘economic emergency’.
By maintaining particularly restrictive limits on long foreign exchange positions, the Bank of Mozambique curtails the ability of banks to accumulate substantial net surpluses of foreign currency.
The measure could, by that mechanism, encourage greater availability of foreign exchange in the market, though its effective impact will also depend on inflows of foreign currency into the economy, corporate demand, and the functioning of the exchange market.
Source: Diário Económico
Original article: https://www.diarioeconomico.co.mz/2026/08/13/economia/banca/bdm-mantem-limite-de-2-para-bancos-manterem-divisas-nos-balancos/
