Historical Sketch

The Portuguese navigator Vasco da Gama was the first European to reach the area of present-day Mozambique in 1498. The Portuguese took possession of the coastal region around the Island of Mozambique to be administered out of Goa. The captaincy-general of Mozambique (or Portuguese Africa) gradually emancipated from Portuguese India in the 18th century and was fully separated in 1836. The hinterland was taken in possession in the late 19th century. Portions in the north and west were ceded to British-dominated chartered companies, Mozambique, Niassa, and Zambezia Companies, which exercised almost complete sovereign rights over their territories. Until 1941, all three concessions had expired, and the territories came under direct colonial rule. In 1951, all Portuguese colonies were transformed into overseas provinces. In the 1960s, the war of liberation began which led to independence in 1975.

Monetary History Overview

In the 16th century, Portuguese trading posts were founded at the East African coast and formed the basis of the later Portuguese East Africa colony. The hinterland was colonized only in the 19th century and left for exploitation through chartered companies. The Portuguese accounting was formally introduced to Mozambique in 1852. The Portuguese National Overseas Bank began operations in 1877 and issued paper money for the colony. In 1901, its banknotes were declared legal tender. The Mozambican Milreis was nominally identical to the Portuguese, however the convertibility of the colonial banknotes was limited. The Portuguese currency reform of 1911 was implemented in Mozambique with three years delay. The Mozambican Escudo was initially at par with the metropolitan currency, but the Portuguese economic crisis after the First World War caused the Mozambican currency to decouple. The ordinance of September 1922 gave the Overseas Bank more flexibility in handling the monetary affairs such that parity could be restored. In 1953, Portugal passed a new constitution for its overseas territories which prescribed the unification of the colonial currencies (except for India). This had no effect on the Mozambican currency, except for an exchange of banknotes and coins after the colony had been renamed an overseas territory.

In 1975, Mozambique attained independence. The new state immediately passed an ordinance for a currency reform and the nationalization of the Overseas Bank. The introduction of a new currency, the Mozambican Metica, in June 1976 could not be done, although banknotes and coins had been produced. In 1977, Mozambique repegged the Escudo to the US Dollar in order to decouple from the Portuguese devaluations. In 1980 finally, the 1st Mozambican Metical (the erroneous spelling "Metica" was now corrected) became the national currency. The exchange rate was allowed to float moderately, which did not reflect the economic situation as the country still was in a civil war. In January 1987, the central bank started a series of devaluations that reduced the Metical's value by almost 95% and floated the rate in December 1988. The currency depreciated strongly for the next decade and began stabilizing only in in the early 2000s. After the end of the civil war, the economy began recovering such that in 2006, a currency reform could be carried out. Three zeros were cut, and the 2nd Mozambican (New) Metical became the new national currency. The value could be kept stable until the mid-2010s when a 50% depreciation occurred.

Mozambique joined the International Monetary Fund (IMF) on 24.09.1984.

Currency Units Timeline

Currency Institutes Timeline

Monetary History Sources