MMA Increases Dollar Sales to Banks by 51% as Foreign Exchange Demand Rises

The Maldives Monetary Authority (MMA) has increased the supply of US dollars to banks after foreign exchange sales rose significantly in July and the country’s official reserves recorded a monthly decline.

According to statistics released by the MMA, the volume of US dollars sold in July increased substantially compared with June.

July also marked a period in which the total value of foreign currency sold by the MMA exceeded the foreign currency inflows recorded during the month, highlighting continued pressure on the country’s foreign exchange position.

In response to the increased demand, the MMA decided on August 11 to temporarily increase the amount of foreign currency supplied to banks.

Under the measure, the MMA will increase its weekly foreign currency sales to banks by 51 percent above the usual allocation for a period of three weeks, beginning this week.

The central bank said the move is aimed primarily at easing difficulties faced by businesses in obtaining foreign exchange for telegraphic transfers (TTs) and letters of credit (LCs) needed to import goods.

The increased allocation is expected to provide banks with greater access to US dollars and help businesses meet their foreign currency requirements for imports.

Meanwhile, monthly reserve data published by the MMA shows that the Maldives’ official reserves declined during July.

Official reserves fell from USD 686.8 million at the end of June to USD 638.0 million at the end of July, representing a decline of approximately 7.1 percent over the month.

The decline comes amid continued foreign exchange pressures, with demand for US dollars remaining high due to the Maldives’ heavy reliance on imports.

The temporary increase in dollar sales is therefore expected to provide additional foreign currency liquidity to the banking system while helping businesses manage import-related payments.

The MMA has previously taken measures to increase the availability of foreign currency through the banking system as part of efforts to address foreign exchange shortages and support the smooth flow of essential imports.