Mauritius’s rupee strengthened the most in almost three months against the dollar after the central bank raised its benchmark interest rate to curb inflation. The Indian Ocean island nation’s currency appreciated 2.6 percent to 27.85 per dollar by 2:00 p.m. in the capital, Port Louis, the most since March 21. That made it the second-best performer worldwide against the dollar today after Solomon Islands’ dollar, according to data compiled by Bloomberg. “Yesterday’s quarter of a percent rise is almost equivalent to the yearly yield on the dollar,” Nitish Benimadhu, a fund manager at the Port Louis-based Anglo Mauritius Financial Services Ltd., said by phone today. “This attracts hot money.” The Bank of Mauritius raised its key repo rate to 5.5 percent following a quarterly Monetary Policy Committee meeting, the second increase in three months. The rupee has gained 10 percent against the dollar since the start of 2011. “Market sentiment and momentum for the rupee are stretching,” Benimadhu said. “The rupee is not expected to weaken in the next six months.” With the U.S. Federal Reserve Bank’s $600 billion second round of quantitative easing reaching its end in June, there will be more volatility in the dollar, Bank of Mauritius Governor Rundheersing Bheenick told reporters in the capital today. “The central bank has no privileged exchange rate”, he said. Since June 2010, the central bank has bought about $500 million from the domestic foreign-exchange market, he said. To contact the reporter on this story: Kamlesh Bhuckory in Port Louis at kbhuckory@bloomberg.net To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net

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