The Seychelles’ economy is picking up as the rupee appreciates against the dollar but it has not yet reached its full growth potential as the prices of commodities are expected to drop.
The Governor of the Central Bank of Seychelles (CBS), Caroline Abel, told the press that although there is a decrease in the exchange rate, it is not entirely derived from economic activities, thus any change occurring should be gradual whereby people can adjust.
The Governor added that CBS has observed that the movement in the exchange rate has been very fast and compared to the same period last year it has been a complete turnaround.
“As the foreign exchange rate brings certain advantages to the economy in relation to a drop in the value of importation, some people might be also affected as they would receive fewer rupees upon exchanging.
“Last year around this time when we had a large decrease in tourism. When there was no income being generated by that sector we had a shock on forex revenue and that made the exchange rate more expensive.
“At that time last year, we had a negative outlook of $4 million and CBS had to intervene using the country’s reserves to sustain importation and the market,” she said.
According to CBS, the Valueof Seychelles’ rupee rises another 7 percent over last week to an average of 14.70 and a Euro 17.71. Compared to last month, that was a reduction of 7.4 percent on the dollar and 7.1 percent on the euro
The appreciation of Seychelles’ rupee is attributed flexible exchange rate which means the market forces will determines the price.
Abel noted a positive outlook in general as there is more supply of foreign exchange for the past five months.
The economy of Seychelles, an archipelago in the western Indian Ocean, relies heavily on imports, therefore an appreciation of the domestic currency should translate into lower inflationary impulses and therefore a reduction in prices of goods and services.