##ouped their losses since the resumption of trading operations on the stock exchange of mauritius. 27. the labour market has seen an increase in unemployment but not to the extent initially anticipated. fiscal support has mitigated the anticipated deterioration in the rate of unemployment. 28. the lacklustre performance of exports continues to negatively impact domestic output. on the other hand, imports have declined further, reflecting supply - chain disruptions as well as a fall in demand. 2 / 5 bis central bankers'speeches inflation 29. consumer prices remain under the influence of weak demand - side and mild cost - push pressures. subdued inflationary pressures persisted in august 2020, due to low international commodity prices. 30. despite the recent rise in prices of some products, the impact on the consumer price index has partly been offset given their relative share in households ’ expenses and the normalisation of prices of fresh vegetables. 31. headline inflation has stabilised at 1. 8 per cent in the three months to august 2020. year - onyear inflation has dropped to 1. 5 per cent in august, from 1. 7 per cent in june 2020. foreign exchange market 32. activity on the foreign exchange ( fx ) market has picked up since the last mpc meeting, though the value of transactions remains below normal levels in current circumstances. 33. the bank has continued to supply fx to the market, mostly through regular fx interventions, to ensure adequate fx liquidity and to support economic activity. the bank has sold a total amount of usd823 million to the market since march 2020 to date. 34. in addition, the bank has put at the disposal of commercial banks a total of usd1 billion since march 2020 in the form of fx lines of credit and fx swaps. 35. the exchange rate of the rupee has more or less stabilised in the past few months. 36. i meet with bankers every fortnight to review and assess conditions on the fx market. the bank ’ s timely policy responses have allayed fears of fx shortage and ensured adequate supply of fx. the bank continues to closely monitor conditions on the fx market. 37. the bank remains committed to maintain orderly conditions on the fx market and support the floating exchange rate regime. balance of payments 38. the current account deficit is now estimated to rise to 14 per cent of gdp for 2020, compared to the july 2020 estimate of 13. 5 per cent, as a result of the significant drop in tourism receipts. 39. the gross official international

reserves of mauritius stands at usd6. 93 billion as at today, representing 12. 6 months of imports of goods and services. 40. the bank has estimated that the country could lose, on a net basis, about rs58 billion in terms of foreign exchange earnings in 2020, mainly arising from revenue losses from tourism and exports of goods and services. 41. the bank estimates that mauritius has received nearly rs7 billion of gross direct investment flows as at end - august 2020. for 2020, it is projecting around rs10 billion of inflows. 42. viewed against various traditional reserve adequacy metrics and more rigorous methodologies used by the imf — notably with regard to imports, exports, broad money and short - term debt — the current level of reserves is assessed to be adequate. they provide a buffer against headwinds over the next few quarters. money market 3 / 5 bis central bankers'speeches 43. with regards to the money market, liquidity in the banking sector is adequate to support the accommodative monetary policy stance of the bank. the bank has been gradually bringing excess liquidity to a tolerable level. 44. outstanding bank of mauritius instruments stand at rs111 billion as at today, an increase from rs85 billion on 8 july 2020. 45. excess liquidity dropped recently as a result of the net issuance of bank of mauritius securities and regular interventions on the fx market. interbank transactions remained relatively low, as most banks have an excess rupee position. 46. several central banks had started reviewing their monetary policy framework, even before covid - 19 in a context of low interest rate and below - target inflation rate. given the current context and changing dynamics, the bank will bring up to date its monetary policy strategy. financial stability 47. bank loans to the private sector continue to rise, growing year - on - year by 5. 1 per cent in july 2020, from 4. 1 per cent in may 2020, the highest pace recorded since may 2019. annual growth in bank loans was supported by both households and corporate borrowings. 48. the capital and liquidity positions in the banking sector remain strong, well above the regulatory limits. the aggregate capital adequacy ratio was 19. 5 per cent as at end - june 2020, a 1. 3 percentage point improvement over march 2020. 49. the different measures taken by the bank have helped alleviate pressure on commercial banks ’ capital and liquidity positions, and ensured