MGA: Ready For Take Off?

February 2007 | Currency Forecast

Madagascar's macroeconomic stabilisation process is continuing, following the destructive 2004 cyclones, and we expect imbalances in the economy to reduce over the coming years. Pro-growth government reform plans following the re-election of market-friendly Marc Ravalomanana debt relief, good relations with the IMF, falling inflation and increasing openness to FDI all bode well for the ariary. On a technical basis, any end-month close on the stronger side of MGA2,000/US$ will likely setup long-term gains. We feel that MGA1,800/US$ is a realistic target. However, high external imbalances and the government's policy of maintaining a competitive real effective exchange rate will stem the

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