What is the MZM (Mozambique Metical)
MZM (Mozambique Metical) 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.
The plural of metical is meticais. The Mozambique metical subdivides into 100 centavos is represented by the symbol MTn or MT.
BREAKING DOWN MZM (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. 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 the devaluation of the MZM and a new issue of banknotes in 2003. These new notes had higher denominations, reaching up to 200,000 and 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). At this time, the second issue metical had a value of approximately 24,500 meticais per one USD.
Downward pressures forced the redenominated of the second 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.
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.
On October 1, 2011, Banco de Moçambique issued a new series of banknotes which are similar to the 2006 series. However, the new notes have 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.
The Mozambique Economy and Metical Value
Portuguese speaking Mozambique gained independence from Portugal in 1975 after ten years of sporadic fighting. The young nation gained support from Cuba and the Soviet Union but fell into a long and bloody civil war which would span 15 years. These long years of warfare caused the collapse of the 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 made some significant gains between 2015 and 2016. According to 2017 World Bank data, the Republic of Mozambique experiences an annual gross domestic product (GDP) growth of 3.7%. The nation has an inflation deflator of 9.8% per year. Mozambique businesses readily accept the USD, euro (EUR), and South African Rand (ZAR).
In the years between 2007 and 2017, the metical hit record lows against the U.S. dollar. Closing at 23 in April 2010 and reached an all-time low of 78.45 in October 2016.
The metical suffered a further collapse in 2016. This drop in value was due 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.