The rupee will not be officially devalued but this will not prevent it from gradually losing its worth. The prime minister got things straight by announcing that there will be no official devaluation of the rupee. But businessmen all agree that the rupee has been going down for a few months and will probably continue to follow that trend.

In fact, devaluation means that the exchange rate of a currency is reviewed downwards against others. But devaluation can only occur when there is a fixed rate between two currencies, which is not the case in Mauritius. This is why the PM said there would be no devaluation.

Having a devaluation would mean that Mauritius would revert to its former system, abandoned since 1983. As from then, the country adopted a floating exchange rate. ?The declaration of the PM is reassuring as he has made it clear that ?market forces? have to continue playing their role,? an observer explains.

In fact, all businessmen are aware that the value of the rupee will continue to decrease. However, they believe that the PM?s policy announcement was important. The secretary general of the Chamber of Commerce and Industry, Mahmood Cheeroo, states, ?When speculation starts, there is more shortage, everything gets more complicated and that creates more pressure. You have to keep a cool head when you are managing monetary policy.? But it appears certain that the rupee will not regain its value. The 36% drop of the sugar export prices started the rumours of devaluation. Stakeholders might have felt that they would have enormous difficulties facing it and that the only solution lay in devaluation. But, according to economic observers, a devaluation today would not have the same impact as in 1981. Our economy is far more diversified and the sugar industry doesn?t have the same weight in the economy.

BOM ANNUAL DINNER

The governor of the Bank of Mauritius, Rameswurlall Basant Roi, recommends that tax and monetary policies be managed with more rigour. He addressed bankers and businessmen at the BoM annual dinner advocating that Mauritius should bring in major changes in the near future rather than piecemeal and gradual ones. According to the governor, recent developments in the economy ? which is bringing the external balance lower ? should make the country more aware that it should adopt strict monetary and tax measures. ?Problems are there and will continue to be there. In fact, problems are made to be redefined and transformed. They are made to be overcome.?