Central Bank asks Seychellois to postpone optional purchases to help foreign currency reserves

CBS is trying its best to make the reserve last as long as possible. (Seychelles News Agency) 

(Seychelles News Agency) - The demand for foreign exchange in Seychelles has increased in the past week, a top official said, as the Central Bank asked residents to postpone optional purchases until later.

Foreign currency changed into rupees was $9.3 million while rupees changed into forex was $10 million for the week May 6-13, the governor of the Central Bank, Caroline Abel, told a press conference.

"When we compare it to the week before it is an increase of 13.4 percent from forex to rupees," said Abel.

She said that even though the CBS has a reserve, the bank is trying its best to make the reserve last as long as possible given the COVID-19 situation and massive losses in the tourism industry.

"The economic reality we are in is not short term. It is a very prolonged reality," she added.

Abel said that while the Central Bank is doing its utmost to prolong the national reserve, every individual must do the same.

Abel said that residents need "to spend on important things, that we need every day. Those that we can push for later to leave it for later."

As of May 14, Seychelles has a reserve of $608 million, out of which $427 million can be spent. Calculations show that this reserve can sustain the country for 17.8 months.

She said that generally, there is a risk of inflation and the Central Bank is closely monitoring the situation. She noted that demand for many items around the world is dropping, which will have macro-effects on the economy, including the cost of importing goods.

The current economic situation of Seychelles, which depends heavily on tourism, is reflected in the recently released Fitch Ratings.

The archipelago in the western Indian Ocean dropped two notches from its 'BB' rating in 2019 to a 'B+' rating with a stable outlook this year.