What Is the MUR (Mauritius Rupee)?
- The MUR (Mauritius Rupee) is the ISO currency code for the official currency of the Republic of Mauritius, commonly known as the rupee.
- The MUR was pegged to the Indian rupee, which was itself pegged to the British pound (GBP) until 1934, when this peg was simplified and the MUR became directly pegged to the British pound at a rate of 13.3 MUR to 1 GBP.
- Since 1994, the Bank of Mauritius has managed the value of the MUR (Mauritius rupee) against other currencies by resorting to the procedure known as a dirty float.
Understanding the MUR (Mauritius Rupee)
The MUR was created in 1874 when it replaced the Mauritian dollar and the Indian rupee (INR). The new currency was pegged to the Indian rupee, which was itself pegged to the British pound (GBP). In 1934, this roundabout peg was simplified when the MUR became directly pegged to the British pound at a rate of 13.3 MUR to 1 GBP. The Bank of Mauritius came into existence in late 1967, replacing the Board of Commissioners of Currency ahead of the country’s independence from Britain.
The MUR is issued by the central bank of Mauritius, the Bank of Mauritius, and though it is subdivided into 100 cents, these coins are not in circulation. Since 1994, the Bank of Mauritius has managed the value of the MUR against other currencies by resorting to the procedure known as a dirty float.
The Mauritius rupee is one of several currencies that carry the rupee designation. Other currencies include those of India, Pakistan, and Indonesia. Under a system of dirty floats, the Bank of Mauritius manages the exchange rate by intervening in foreign exchange markets, using the country’s reserves to stabilize the value of its currency in times of volatility.
In 1820, at the colony’s request, Britain introduced the Mauritius dollar at par with the Spanish dollar, though Indian rupees and British pounds continued to circulate alongside the dollar. An influx of Indian immigration into Mauritius in the mid-1800s caused a massive inflow of Indian rupees into the country. This influx led to the establishment of the Mauritius rupee, which replaced the Indian rupee, the Mauritius dollar, and the British pound as legal tender in the country in 1877. The new currency, introduced at par with the Indian rupee, was equal to 0.5 Mauritius dollars. At the time, 10.25 Mauritius rupees equaled one British pound.
The country abolished its peg to the British pound in 1972, establishing an exchange rate that functionally tracked the U.S. dollar through a crawling band or peg. In 1979, a fall in global sugar prices and a rise in oil prices put pressure on Mauritius’ economy. As part of the agreement to receive aid from the International Monetary Fund (IMF), the country agreed to a 22.9% devaluation of the rupee in October of that year. Another sizable depreciation of 16.7% followed in Sept. 1981, leading to political upheaval and an ongoing debate about the social and political fallout from currency devaluation.
In 1982, the bank re-pegged the currency to a basket of currencies weighted to reflect its major trading partners. This situation, as well, wound up tracing movements of the U.S. dollar with a slightly broader crawling band than seen previously. Independence coincided with the abolishment of restrictions on foreign exchange within the country and a change in policy that effectively narrowed the crawling peg around the U.S. dollar. Further liberalization of fiscal policy resulted in a move to a managed float policy, which the central bank has used since 1994.
Brief History of Mauritius and its Economy
The Republic of Mauritius is a small island nation off the southeast coast of Africa. The island nation had been a Dutch, French, and British colony between 1638 and 1968 and was the home of the now-extinct bird, the dodo.
In 1965, the British government began to divest itself of its colonies. Mauritius adopted a constitution and declared independence in 1968. The political structure followed the British parliamentary system and did not become a true republic with elected representatives nominated and voted for by popular ballots until 1992. South Africa, France, and the United Kingdom are the nation's largest trading partners
According to the World Bank data, Mauritius has an upper-middle-income diversified economy consisting of tourism, textile, and sugar. As of 2017, the nation has a 3.8% annual gross domestic product growth with a yearly inflation deflator of 1.9%.