(Seychelles News Agency) - The board of the Central Bank of Seychelles (CBS) is maintaining a relaxed monetary policy rate of 2 percent for the last three months of the year, a top official said on Tuesday.

The first deputy governor of CBS, Brian Commettant, told reporters that the board took this decision based on developments within the economy of Seychelles as well as what is happening globally.

He outlined that unless there is a drastic change in analytic results, the monetary policy will be maintained at 2 percent for the fourth quarter of the year.

"Generally, domestic activities continue to recover, however, the level of uncertainties, especially linked with international developments that have direct impacts on Seychelles, are of concern for the Central Bank," said Commettant.

Tourism remains the number one contributor to foreign exchange inflow in the economy of the country, followed by professional services, construction, and fisheries.

"An increase of 10 percent has been observed in the amount of foreign exchange being exchanged on the market, with an increase of 5.4 percent in the level of demand as compared to last year," said Commettant.

He outlined that the total value that has been exchanged on the market stands at an equivalent of $678 million, whereas demand stands at $657 million.

"Based on this statistic, since the start of the year to date, the country has retained $22 million compared to the same period last year, when a total of $8.7 million was bought on the market," he added.

The demand for foreign exchange is being driven by the wholesale and retail sector, followed by petroleum, and tourism.

Commettant said that the value of the Seychelles rupee has generally strengthened as compared to last year, despite recent developments - mainly an increase in demand during the second half of the year. This has caused a depreciation in the value of the rupee as compared to the U.S. dollar. 

"As a country that depends heavily on importation, when the value of the rupee strengthens, it means that you need less rupee to buy a dollar. As we import a lot, this means that the amount of rupees required to buy commodities is less as compared to when the rupee was weaker," he explained.

Based on information from last Friday, the reserve level of the country stood at $712 million of which $545 million can be spent.

During their meeting, the board took into consideration foreign inflation rates. Foreign inflation is expected to gradually subside although they remain above target at the moment.

"If we are to consider the European economy, measures that have been put in place to ensure that the gas stock remains stable have contributed to relieving pressure on prices. The level of demand from China, which was less than expected, has also helped to reduce the pressure on energy and food prices, which results in a lower inflation rate as compared to the level that was recorded in 2022, despite the fact that food prices remain generally high," said Commettant.

The board also looked at global fuel and food prices, which have lowered as compared to last year, despite remaining high compared to their historical levels.

Adverse events, such as the war between Russia and Ukraine, and the possibility of a recession in Europe, are contributing to the level of uncertainties in the economic environment across the world, and for Seychelles.