Consulting firm Fitch Solutions said Thursday that the Mozambican currency is expected to depreciate to 74 meticais per dollar by the end of the year, after a significant appreciation in recent weeks, among the largest worldwide.
“We anticipate that the metical will depreciate from 55 per dollar to 74 meticais per dollar by the end of this year, following a strong appreciation recorded in March and April,” a commentary on the evolution of the Mozambican currency said.
In the commentary, sent to investors and to which Lusa had access, these analysts from the consultancy owned by the same owners of the Fitch Ratings agency argue that “inflation risks will decrease during the rest of 2021, reducing the need for further central bank intervention and thus allowing the metical to resume the gradual depreciation trend.
The metical has appreciated significantly, from 75 meticais per dollar on January 1 to a five-year high on April 15, when it took just 55.1 meticais to buy a dollar, “making it the second most appreciated currency so far since the beginning of the year globally,” Fitch Solutions writes.
Over the past week, the Mozambican currency has depreciated slightly, now trading at 57 meticais per dollar, down from 55 dollars on Monday.
Analysts consider that the currency is overvalued and that the current value “does not reflect favorable macroeconomic conditions,” recalling that the twin deficits (fiscal and external) increased in 2020 due to the impact of the pandemic, and that attacks in the north of the country “sank” the country’s attractiveness as an investment destination.
The appreciation of the metical follows a drop of about 10% over the past year in value against the dollar, and comes against the forecasts of most analysts, who predicted an even greater fall in the metical this year, and takes place despite the wave of violence in the north of the country, which catapulted Mozambique to the top of the international media agenda in recent weeks.
