In view of recent rapid imported consumer price inflation, efforts to reduce the metical's overvaluation to boost export competitiveness are now likely to be put on hold. Through its interventions, the BDM appears to have put a floor under the value of the metical at around MT37:US$1 and MT5.1:R1 since July 2010. We expect the recent unrest over the cost of living to encourage the authorities to let the metical strengthen slightly amid strong expected inflows of foreign investment in 2011. Consequently, we forecast that the exchange rate will average MT32:US$1 in 2011 and MT31:US$1 in 2012.