What is Mozambique Metical (MZM/MZN)
The Mozambique metical (MZM) is the national currency the African nation of the Republic of Mozambique. The currency's name, the metical, comes from the Arabic word mithqal, a unit of weight and an alternative name for the gold dinar coin that saw use throughout much of Africa until the nineteenth century. In 2006, the country re-valued and re-issued the "new metical", under the currency symbol MZN and retired the MZM completely in 2012.
As of September 2020, 1 MZN is equal to roughly US $0.015.
- The Mozambique metical is the official currency of the Republic of Mozambique.
- The metical (MZM) was first issued in 1980 when it repaced the Mozambican escudo following its independence from Portugal.
- Due to continued high inflation and economic struggles, the new metical (MZN) phased out the MZM starting in 2006 through 2012.
Understanding the Mozambique Metical
Mozambique's central bank, the Banco de Moçambique, issues and regulates the Mozambique Metical (MZM). The metical has had two issuances. The first replaced the Mozambican escudo at par on June 16, 1980.
The plural of metical is meticais. The Mozambique metical subdivides into 100 centavos is represented by the symbol MTn or MT. Banknotes circulated in denominations of 50, 100, 500 and 1,000 meticais. Coins had denominations of 50 centavos, 1, 2.5, 10 and 20 meticais.
Hyperinflation caused rapid devaluation of the MZM, resulting in a new issue of banknotes in 2003 that had higher denominations, reaching up to 200,000 and even 500,000 meticais. The country's economy continued to struggle, and by 2005 the metical became the lowest-valued currency in the world in comparison to the United States dollar (USD).
Continued downward pressures forced the redenomination of the Mozambique metical at a rate of 1000:1 on July 1, 2006. To compensate for the lower value, new banknotes in denominations of 20, 50, 100, 200, 500 and 1,000 meticais and coins in denominations of 1, 5, 10, 20, 50 centavos and 1, 2, 5 and 10 meticais circulated. These became known as the "new metical", with the currency symbol MZN. Until December 31, 2006, the country transitioned, and both the old and new notes were legal tender. During the conversion, the new currency was locally abbreviated as MTn but has since commonly returned to MT. By December 31, 2012, the old meticals were no longer redeemable for new meticals and no longer used in exchange.
On October 1, 2011, Banco de Moçambique issued a new series of banknotes which were similar to the 2006 series. However, the new notes had enhanced security features to prevent counterfeiting. The front sides of the bills all feature an image of Samora Moisés Machel, Mozambique’s first President after independence in 1975. The reverse features images of local wildlife, such as giraffes, lions, and elephants.
In the years between 2007 and 2017, the new metical hit new record lows against the U.S. dollar. Closing at 23 in April 2010 and reached an all-time low of 78.45:1 in October 2016. This drop in value was due in part to the discovery of previously hidden loans granted to three state-owned companies. The decline led the International Monetary Fund (IMF) to halt budget support.
The Mozambique Economy
Mozambique gained independence from Portugal in 1975 after ten years of sporadic fighting. The young African nation gained support from Cuba and the Soviet Union but fell into a long and bloody civil war that would span 15 years. These long war-torn years brought about the collapse of the country's economy.
The Republic held free elections in 1993, and by 1995 over 1.7 million refugees returned home from neighboring nations where they had sought asylum during the civil wars. Mozambique continues to teeter on the brink of war as there is much dissatisfaction with the government and continuing charges of government corruption.
Mozambique’s economy has struggled to achieve steady growth since the metical’s redenomination in 2006. The country has indeed made some significant gains between 2015 and 2020. According to 2019 World Bank data, the Republic of Mozambique experiences an annual gross domestic product (GDP) growth of 2.2% with an inflation rate of 2.8% for the year. Mozambique businesses readily accept the USD, euro (EUR), and South African Rand (ZAR).