2010-03-26

PORT LOUIS (Reuters) - Mauritius is looking at the possibility of channelling donor cash into a fund that can be used to help shield businesses from fluctuations of the rupee currency, its industry minister said on Friday.

Textile exporters in the Indian Ocean island nation routinely complain that a strong rupee hurts the sector, threatening jobs and hard-currency earnings.

"The possibility of establishing a sovereign fund to channel foreign exchanged derived from donor funding with a view to stabilise currency fluctuations is being examined," Industry Minister Dharambeer Gokhool told Reuters.

The country's central bank introduced spot currency swaps in December last year to boost liquidity and to control the rose of the rupee against the dollar.

"Although our export sector has been hit by the global slowdown figures show that exports are growing," the minister said.

Export earnings reached 36.07 billion rupees in 2009 from 35.08 billion rupees in 2008 that is an increase of 2.8 percent, he added.

A senior source at the central confirmed that officials are considering starting the fund.

"The setting of a mini sovereign fund will help keeping out funds borrowed from abroad and not needed immediately. It may also be used to pooling together funds from National Pension Funds and other institutions," the source said.

"The IMF encourage Mauritius to set up such a Fund during its Article IV statement released in February"