Historical Sketch

In the early 16th century, several Portuguese navigators discovered the uninhabited islands of Mauritius and Réunion for the Europeans, among them Pedro de Mascarenhas in 1512, whose visit gave rise to the name Mascarenes. Since the Portugues did not take interest in a colonization, the French seized first Réunion in 1649, calling it Isle de Bourbon after the ruling dynasty. After the French revolution the name was changed to Isle de la Réunion (after the “Réunion des patriotes” on 10 August 1792), intermittently also Isle Bonaparte. In 1715, the French also seized Mauritius which just had been abandoned by the Dutch after some 50 years of unsuccessful settlement, from which only today’s name has remained but which the French changed into Isle de France. The administration of the two islands was left to the chartered French East India Company until its failure in early 18th century after which the state took over. During the Napoleonic Wars, Great Britain seized both Mascarene Islands in 1810. Réunion was returned to France in 1815 while Mauritius remained British for more than 150 years. In 1968, Mauritius attained independence, and in 1992 the republic was proclaimed.

Monetary History Overview

During French rule, no distinct monetary order was introduced in the Mascarenes, not was any French coinage imported in a larger scale. Like in other remote colonies the standard French accounting deteriorated over time and a local standard emerged. Around the 1720s, the circulating foreign coinage was rated in a local 1st Mascarenes Livre rather than in the French standard. Payment transactions were made in Spanish Dollars or other trade coins. Occasionally, gold and silver coins from South India came to the islands from the French colonies there. Overall, coinage was scarce, and the island government intermittently issued paper money to overcome the lack of specie, which usually was withdrawn shortly afterwards. All this led to a continued devaluation of money, which turned into a paper money inflation in the late 1790s. In 1810, governor DeCaen ordered the withdrawal of the depreciated paper money and decreed a coinage law for the 2nd Mascarenes Livre as new coin unit in a bi-metallic standard. The reform could never be implemented as in the same year 1810 the Mascarenes were conquered by Britain. A single silver coin could be produced under wartime conditions, popularly referred to as "DeCaen Piastre". In 1815, the Mascarenes were split up, Réunion returned to French rule, while Great Britain kept Mauritius.

The British administration of Mauritius initiated a massive import of Indian coins from their colonies. The unit of account was initially the Spanish Dollar, out of which in 1824 the Mauritian Dollar (or "Colonial Dollar", as it was referred to at the time) was derived, based on the Indian Rupee standard rather than the Spanish Dollar. as (unofficial) unit of account. In 1822 already, local subsidiary coins were issued in denominations of the former Mascarenes Livre (valued at a fifth of the Dollar). At the same time, the British colonial administration also tried to increase money supply and imported Dollar denominated silver coins that had been produced for the West Indies. In November 1825, the Sterling accounting was proclaimed in Mauritius as it was done in all British possessions. This did not have any effect on the confusing monetary situation as the Dollar accounting remained in use (nominally as a fifth of a Pound Sterling), and foreign coinage continued to make up the circulating medium. In 1849, a first step towards the sanitation of the monetary situation was made when the Mauritius Currency Commission began operations. It began issuing paper money denominated in Dollar, Rupee, and Pound. The 1876 currency act finally remedied the currency situation. Beginning of the following year, the Dollar which had always been valued at two Indian Rupees got replaced by the Mauritian Rupee which was at par with the Indian Rupee. Banknotes and coins of British India were also legal tender and circulated alongside the local money. In 1934, the Currency Commission acquired the full competencies of a currency board, and the Mauritian currency got separated from the Indian rupee. Indian money was demonetized end 1938, but parity remained place also after the Indian independence until the 1966 devaluation of the Indian currency. When Mauritius attained independence in 1968 the new central bank had already taken over from the Currency Board a year ago, otherwise the monetary situation did not change. In 1976, the Rupee repegged to the IMF Special Drawing Right (SDR) unit, and after several devaluations the exchange rate got floated in March 1983. Since then, the Rupee is suffering from a slow and steady depreciation.

Mauritius joined the International Monetary Fund (IMF) on 23.09.1968.

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