The Central Bank of Madagascar shares its analyses on the evolution of the exchange rate after these months marked by the pandemic. The MID remains unavoidable.

There is no need to suspend the Interbank Currency Market (MID) or the floating exchange rate regime because Madagascar does not have the foreign exchange reserves likely to support an exchange rate regime. This is one of the essential points announced by the Central Bank of Madagascar, in its analysis of the economic contete in the face of the pandemic. "Without this support, an arbitrarily low tau of the Ariary not reflecting the economic fundamentals, would inevitably lead to the scarcity of currencies and its rationing, which would bring us back to the parallel markets of the '80s and its exchange rate tau much higher than the official exchange rate tau" details the note d 'analysis.

decrease

The institution also announces that maintaining the floating exchange rate regime through the MID requires several orientations and measures. There is the control of domestic inflation and the strengthening of the monitoring of foreign exchange, repatriation and transfer operations. The exchange rate is justified by the supply and demand on the MID. However, the maintenance of the floating regime depends in particular on the promotion of the diversification of exports.

This year, vanilla export receipts are down 44% compared to 2019. The account supplies of mining companies fell by 17%. Imports also fell by 22% for petroleum products and those of consumer goods are indicated "stabilized at a high level" despite the crisis. From 1 January 2020 to 1 September 2020, the ariary depreciated by 11.4% against the euro and by 3.9% against the US dollar.

The strong appreciation of the euro against the dollar would have amplified this depreciation. The rate of 1.0 euros was 1.0750 dollars in March 2020 and rose to 1.1960 dollars on 1 September 2020, a depreciation of the US dollar of 11.25% against the euro at the international level which had a strong impact on the parity between the euro and the ariary. "Given the predominance of payment transactions denominated in dollars (64.2%), in the short and medium term, the depreciation of the ariary against the euro will not significantly impact the level of domestic pri," reassures the Central Bank.

Total international transactions using the dollar were 64.2% if 34% for the euro.