In an interview with Seychelles Nation, CBS Governor Francis Chang-Leng stated that the removal of exchange controls was designed to help quell black market activity and pull money into legal channels.

“We believe that before the end of the year most controls would be lifted on the exchange side," he was quoted as saying.

Earlier in the year, President James Michel explained in his State of the Nation address that exchange controls would be phased out gradually so as not to undermine the stability of the financial system.

President Michael's 2005 budget speech also included measures designed to lead to a more market-driven economy and reduce domestic costs, with the purpose of improving the investment climate in the Seychelles.

In 2001 the government amended exchange control and money and trade taxation laws to tackle the problem of growing black market activity. The amendments closed loopholes in laws such as the Exchange Control Act. Individuals who possess any foreign currency must show evidence that it is obtained from a registered dealer, and the rules prohibit the buying and selling of foreign currency by authorised dealers at rates above the maximum rate or below the minimum rate determined by the Central Bank, as well as prohibiting the export and import of Seychelles currency notes and coins in excess of R2,000.

The Seychelles rupee is currently fixed to the US dollar at a rate of R5.5, and Mr Chang-Leng told Seychelles Nation that he does not expect this to change with the lifting of exchange controls.