Reply: The Bank of Mauritius has taken several measures to address the inconsistency in the conduct of monetary policy that existed prior to November 2024 which led to a sharp depreciation of the Rupee and a persistent foreign exchange shortage in the local market. These measures include – (a) raising the policy rate by 50 basis points to 4.5 per cent per annum in February 2025; (b) instructions to commercial banks to ensure that all dealings in foreign exchange, including swaps and other derivatives are effected through financial institutions duly licensed by the Bank; (c) stricter regulation of intercompany transactions in foreign currencies as well as swaps and other derivatives, and (d) instructions to banks to ensure that forward transactions are priced in a fair manner and in accordance with market fundamentals.

142 The reason behind these measures was to prevent a parallel market, which caused distortions in pricing and drove forex inflows away from the official market. Furthermore, the regulatory arbitrage between the Financial Services Commission and the Bank of Mauritius regarding the purchase and sale of forex by Treasury Management Companies was discontinued. The Bank of Mauritius also has a monthly meeting with the Treasurers of banks through the Mauritius Financial Markets Committee to monitor the market situation. In addition to these measures, the Bank of Mauritius has intervened to supply forex in the domestic market. From November 2024 up to 19 November 2025, the Bank has injected a total of USD 244 million. At the level of Government, we have complemented these measures by imposing that at least 85 percent of the proceeds from sales of villas under the Property Development Scheme should be converted into rupees. Furthermore, as from this fiscal year, all businesses that receive at least 50% of their annual turnover in foreign currency are paying their tax in foreign currency. The Tourist Fee of 3 Euro per night per tourist effective as from the 01st of October this year is also generating additional foreign exchange for the country. I am informed by the Bank of Mauritius that the daily average volume of demand for forex in the local market during the period 01 October to 19 November 2025 was USD 29.6 million and the daily average volume of supply of forex amounted to USD 26.2 million. I am further informed that from the beginning of January 2025 to 19 November 2025, total forex supply to the market stood at USD 6.5 billion, that is, USD 1.1 billion above the level registered during the same period last year. This clearly shows an improvement in liquidity condition as a result of the measures taken since November 2024. I am informed that the Bank of Mauritius is monitoring the situation on the domestic foreign exchange market closely and appropriate actions will be taken as required to ensure an adequate supply of forex in the local market. MR M. H. DEATH – ROAD ACCIDENT – INQUIRY