The Board of Directors of the Bank of Mozambique on Monday in an extraordinary session decided to reduce the required reserve ratio, the amount of money that banks commercial banks must deposit at the central bank, by 150 basis points, according to an official statement.

The statement from the central bank said that with this decision, the reserve ratio has been reduced from 13% to 11.5% in local currency and from 36% to 34.5% in foreign currency, with effect from 7 April next.

The decision taken by the Board of Directors of the Bank of Mozambique is intended, according to the statement, to release give the banking system liquidity to cope, in a more resistant way, to the growing risks arising from the macro-economic impacts of Covid-19.

“The Board of Directors believes that the outlook for inflation in the medium term remains favourable, but the worsening of the risk of the Covid-19 pandemic requires that the financial system is sufficiently prepared, with necessary liquidity, to respond quickly to possible negative effects,” the statement said. (macauhub)