Mozambican currency turnaournd ‘will not last’

January 31, 2016, 6:41am

By Felix Njini, Bloomberg on Business Day Live
Photo: Thinkstock

THE Mozambican metical’s turnaround from being one of Africa’s biggest losers last year to the best performer globally so far in 2016 probably will not last.

The currency has gained 7% against the dollar this year, reversing a 32% decline in 2015 that was its biggest drop in two decades. Still, it is poised to weaken this year because of slowing Chinese growth and the stronger US dollar, Hanns Spangenberg, senior economist at NKC African Economics, said.

"The largest pressure on the metical will likely stem from Mozambique’s current account deficit," he said.

Mozambique’s current account gap, the broadest measure of trade in goods and services, is forecast at 45.3% of gross domestic product this year, the highest in the world after Libya and Tuvalu, according to International Monetary Fund data.

Bloomberg