The metical is the official currency of Mozambique, a major coastal nation of southeast Africa. The currency is subdivided into 100 centavos, but the use of centavos-denominated coins was, until recently, rare due to significant currency devaluation. In 2005, the metical became the least-valued currency in the world with exchange rates as low as 1 metical: 28,846 AUD, but this title was forfeited to the Zimbabwean dollar after the metical was revalued in 2006. The current metical is referred to as the new metical, a name which is expected to last until the Bank of Mozambique stops redeeming the old metical at the end of 2012. Although the currency was recently revalued, many business transactions in Mozambique are conducted in U.S. dollars, euro, and South African rand, as these are considered safer currencies.
The metical was first introduced in 1980 as a replacement for the Mozambican escudo, which had been the currency under Portuguese rule. It was issued on par with the escudo. Over the next 16 years, the metical experienced severe devaluation. In order to bring the currency back up in value, a new metical was issued in 2006 at a rate of 1 new metical: 1000 old metical. For a period of time after the conversion, the symbol MTn was used to denote the new metical, but the n has since been dropped.
The metical is issued by the Bank of Mozambique, established in 1975 as the central bank and currency-issuing bank for the nation. The bank is located in Maputo, and its duties include supervising the financial sector and the foreign exchange and managing foreign reserves.
Mozambique is a poor nation, but the government has taken corrective measures such as the implementation of an A$57.19 per month minimum salary and becoming a member of the Southern African Development Community (SADC). SADC has created free trade amongst its member nations. The success in the turnaround of the economy led the International Monetary Fund to be deem Mozambique “a success story in Sub-Saharan Africa.” However, the World Bank pointed out that the country still faces several obstacles in further economic growth, such as high rates of child malnutrition. As of 2011, economic growth continues at an average annual rate of 8 percent. The leading sector in the economy of Mozambique is agriculture, but mining, manufacturing and tourism are becoming increasingly important.