MZN - Mozambican Metical

The history of the formation and development of the Mozambican Metical (MZN)

In 1980, the Mozambican Metical was introduced for the first time, replacing the Mozambican escudo at a rate of 1 Metical = 1000 escudo. The MZN was introduced during a period when Mozambique was undergoing an economic transition and needed a new currency to align with the development situation.

The period from 1980 to 1990 saw the Mozambique Metical facing many difficulties and challenges due to the war situation and political instability. In addition, high inflation rates caused the value of the MZN to decline significantly.

The period from 1990 to 2000 saw Mozambique undertake economic and political reforms, such as ending the civil war and transitioning to a market economy.

In 1995, the government decided to issue the new Mozambican Metical at an exchange rate of 1 new Mozambican Metical = 1000 old Mozambican Meticals. With the aim of improving liquidity and exchange rate stability.

Currently, the Mozambican Metical is managed and issued by the Central Bank of Mozambique.

Mozambican Metical (MZN) Denominations

Currently, the Mozambican Metical is issued in various denominations, ranging from banknotes to coins. To serve the daily transaction needs of the people.

Mozambican Metical banknotes

• 20 Meticais

• 50 Meticais

• 100 Meticais

• 200 Meticais

• 500 Meticais

• 1000 Meticais

Each banknote is designed with distinctive images that reflect the historical culture and landscapes of the country. The banknotes are produced using high technology, counterfeit-resistant, and ensure safety and durability during use.

Mozambican Metical coins

• Commonly used: 1, 2, 5, 10 Meticais

• Rarely used: 1, 5, 10, 20, 50 Centavos (no longer issued but still legal tender)

The coins are used for small transactions, making it convenient to pay at markets and stores. Maintaining these coins is not only a means of payment but also preserves the value of the national currency.

Mozambican Metical (MZN) exchange rate

As of now, the exchange rate of the Mozambican Metical against other foreign currencies is: 

• 1 MZN = 0.016 USD (United States Dollar)

• 1 MZN = 0.014 EUR (Euro)

• 1 MZN = 0.015 GBP (British Pound)

• 1 MZN = 0.47 THB (Thai Baht)

• 1 MZN = 0.40 VND (Vietnamese Dong)

Compared to the above foreign currencies, the MZN has a lower value. This reflects that Mozambique is a developing country, facing many difficulties and challenges. To gain a more comprehensive view of the value of the MZN, it is necessary to consider the following influencing factors.

Factors affecting the value of Mozambican Metical (MZN)

Below are the factors affecting the value of the Mozambican Metical:

Slow economic growth

Mozambique is a developing country whose economy primarily depends on resource extraction and agriculture. The unstable economy and numerous difficulties negatively impact the value of the MZN.

Mozambique has a high public debt

The high public debt situation undermines investor confidence in the national economy, causing the MZN to depreciate on the international market.

The situation of high inflation

High inflation will reduce the purchasing power of the currency, increasing daily expenses. When inflation is high, the real value of the MZN depreciates in the market, causing the exchange rate of the MZN to drop significantly.

Unstable monetary policy

The Central Bank of Mozambique adjusts monetary policy ineffectively, and low interest rates do not attract investors. If the monetary policy is not strong enough to control inflation and maintain the value of the currency, the MZN will continue to depreciate.

Dependent on Export Goods

Mozambique's economy mainly relies on a few key export commodities such as agricultural products and minerals. The volatility of international commodity prices can affect foreign exchange income and thus impact the value of the MZN.

Thus, the low value of the Mozambican Metical is due to multiple influencing factors. To improve the value of the MZN, Mozambique needs to enhance its economic situation, implement more effective monetary policies, and strengthen political and social stability.

Future of the Mozambican Metical (MZN)

The future of the Mozambican Metical (MZN) presents a complex interplay of economic variables, geopolitical considerations, and socio-economic developments that will significantly influence its trajectory in the coming years. As Mozambique continues to explore its vast natural resource wealth, including substantial reserves of natural gas and mineral deposits, the potential for economic growth and stability exists, which could bolster the value of the Metical.

However, this potential is tempered by challenges such as inflationary pressures, fiscal deficits, and external debt obligations, which have historically impacted the currency's stability. Furthermore, the effectiveness of monetary policy implemented by the Bank of Mozambique will be critical in managing inflation rates and ensuring a conducive environment for investment. 

The government's efforts to enhance infrastructure and improve governance are also paramount, as they can instill greater confidence among foreign investors and thereby positively influence the currency. Ultimately, the evolution of the Metical will be contingent upon both domestic reforms and the global economic landscape, necessitating a comprehensive assessment of multiple factors to ascertain its future positioning within the regional and international monetary frameworks.