Ongoing Situation - Limited Currency: Rising Pressure on Prices and Imports
The currency shortage in Mauritius has become a prolonged issue, raising concerns among both economic operators and consumers. With reliance on imports, monetary regulation, and external shocks, tensions are mounting. This analysis explores the causes, existing policies, and potential solutions to alleviate the situation.
The scarcity of currency in the Mauritian market is not a new phenomenon, but it appears to be intensifying. Many economic players agree that this situation stems from the very structure of the country’s economy, which is heavily reliant on imports. A currency trader summarizes the situation: “The shortage mainly affects the euro and the dollar, two essential currencies for international transactions.”
As the cost of imports continues to rise, all available currency is being directed towards paying for these imports. In other words, the available reserves are primarily mobilized to meet the country’s vital needs, particularly for essential goods. “This pressure leaves little room for other uses. Individuals, especially those wishing to travel, are directly affected. They struggle to obtain the amounts they need. The supply of currency can no longer meet the entire demand,” he points out.
This observation is echoed by Ashok Sonah, president of the Association of Mauritian Retailers (AMR), who notes that the problem dates back to the COVID-19 pandemic in 2020. Since then, difficulties in accessing currency, particularly US dollars, have persisted. “Even if we manage to obtain some, it is not always the required amount, or we pay more for the dollar than the market rate.”
The consequences for businesses are numerous. First, there are disruptions in payments to foreign suppliers, leading to delays in orders and even temporary product shortages. “Then there’s an increase in procurement costs, which inevitably affects consumer prices,” he laments.
According to Alexandre Sanchini, CEO of Blue Ship Capital, the difficulty in accessing currency is also due to a regulatory framework.
“Technically, the problem is caused by the central bank restricting access to currency,” he states. However, he notes that this regulation is necessary. “In an importing economy like Mauritius, it is crucial to preserve foreign exchange reserves and prioritize essential uses.”
Monetary and Trade Policies
In the face of this shortage, monetary and trade policies play a central role. They aim to regulate access to currency while attempting to correct the structural imbalances of the economy. However, their effectiveness is limited by underlying factors. Alexandre Sanchini emphasizes a key point: “The root cause of our currency shortage is the structure of our economy.”
For him, as long as Mauritius remains heavily dependent on imports of consumer goods, food, and energy, pressure on currency will persist. The goal, according to him, should be to gradually transform the Mauritian economy into a model capable of generating a trade surplus. “This would involve developing exports, whether in services like tourism or financial services, or in goods from fishing and agriculture,” he asserts.
However, these efforts face external realities. Ashok Sonah highlights the impact of geopolitical tensions, particularly the war in the Middle East. According to him, these events could directly affect tourist flows, a major source of currency for Mauritius. “We are already hearing that bookings and the arrival of tourists in the coming months are decreasing,” he observes.
Concerns extend beyond tourism. “Potential disruptions in supply chains, particularly for fuel, could worsen the situation. The mention of a possible blockade of the Strait of Hormuz illustrates the systemic risks that an island economy is exposed to,” he warns.
In this context, merchants find themselves on the front lines. Faced with rising costs, declining consumption, and pressure on cash flow, their room for maneuver is shrinking. “We are fighting for our survival,” asserts Ashok Sonah.
Total Intervention
- 2024: $370 million
- 2025: $220 million
In Numbers
The interventions of the Bank of Mauritius in the currency market:
- In January 2026: $10 million
- In March 2026: $15 million
What Solutions to Improve Currency Availability?
In light of this situation, several solutions are proposed to improve the situation. Some are short-term measures, while others are part of a deeper transformation of the economy. On the side of monetary authorities, Alexandre Sanchini believes that the Bank of Mauritius already plays a key role. “It manages to regulate the circulation of currency without its scarcity becoming catastrophic, while steering exchange rates in a complex environment. This prudent management aims to prevent a more severe deterioration of the situation,” he says.
However, for merchants, additional adjustments are needed. Ashok Sonah proposes several measures. Among them, revising certain taxes and fees to contain inflation and protect purchasing power. He also advocates for increased intervention in the currency market to stabilize the rupee and secure importers in their transactions. Beyond immediate measures, the issue of economic autonomy re-emerges insistently. “The development of renewable energy, particularly through solar farms and incentives for domestic equipment, is presented as a lever to reduce dependence on energy imports and thus foreign currency outflow,” he argues.
Similarly, he says, strengthening local production appears to be a priority. “By improving food security and reducing reliance on imports, Mauritius could alleviate the pressure on its currency reserves,” he points out. He also proposes support measures for businesses, such as deferring tax deadlines in the short term. “The goal would be to relieve the cash flow of economic operators, particularly weakened in the current context,” he suggests.