The Mauritian Rupee is the official unit of exchange in the Republic of Mauritius and is depicted with symbols “Rs”. The currency came into existence and has been serving the nation since the year 1934.
The subunit of Mauritian Rupee is provided by “cent” and is counted among the only three Rupee currencies to use “cent” as its sub divisional unit. The Bank of Mauritius, which was established in 1966, looks after the flow of currency in the country and performs the role of the central bank of Mauritius. The first currency notes and coins were issued in the year 1876-77 during the reign of United Kingdom. Currently, the currency circulates in the country in total 15 face values, 7 in paper note form and the rest 8 in coin form.
In 1934, Mauritius introduced its own currency, the Mauritian Rupee but it was pegged to the British pound (GBP) until 1972. The year 1974 is remembered for the sugar boom event following large sugar production and high sugar prices in the world market. This was accompanied by a high rate of money supply and a significant increase in salaries. The government had to use price controls to contain inflation. Increasing oil prices in the late 1970s coupled with adverse weather conditions causing damage to food crops deteriorated the economic situation of Mauritius. In the same period, the island adopted its first Structural Adjustment Programme and the Rupee was devalued by 22.9 % in October 1979. The immediate impact of this occurrence was seen on import prices which sky rocketed. Consequently, in October 1980, Mauritius witnessed an inflation rate of 42 % - the highest ever recorded since its independence. The much higher inflation rate in Mauritius compared to its other trading partners took a toll on the economy and the Mauritian Rupee was bound to suffer from a continuous depreciation spree against the US dollar.
Exchange rate restrictions were removed in the early nineties and by 1994 the Rupee was under the semi-managed float regime. Since then, the Mauritian Rupee has fluctuated against the US dollar with notable swings during the 2008-2009 US financial crisis. The USD/MUR rate is currently at MUR 30 against the US dollar.
The USD/MUR exchange rate since 2000
Recent downside risks to global gr-+owth outlook from the lingering Eurozone sovereign debt crisis and the possibility of further fiscal tightening in the US remained a drag on investors’ sentiment. The International Monetary Fund (IMF) has trimmed its forecast for global economic growth. It now expects global growth of 2.9% in 2013, a cut of 0.3% from July's estimate. In 2014, it expects a global growth of 3.6%, down by 0.2%. Furthermore, the IMF added that failure to lift the US debt ceiling would lead to potentially major disruptions and hurt the economic recovery further.
External headwinds though the slowdown in main trading-partner countries restrained activity in domestic major export sectors and led to a decline in growth; the 2013 economic growth is now forecast at 3.2% from 3.3% in 2012. Rising uncertainty and volatility will make both short term and long term planning difficult as well as reduce the country’s export competitiveness. The outcries of local importers and exporters show their extreme vulnerability to the vagaries of global financial markets.