A notable positive shift has taken place within the balance sheet of Bank of Maldives, where a previously elevated exposure to US dollar currency risk has been reduced at a time when dollar shortages continue to shape the wider economy.
The Bank, which had earlier held a US dollar short position reaching around -20% of capital in the third quarter of 2024, equivalent to roughly USD 200 million, has since moved that exposure to a long position in September 2025 and maintained it well within regulatory requirement up to now. The adjustment, disclosed by CEO Mohamed Shareef during the Bank’s Annual General Meeting held on 28th March 2026, reflects a recalibration of how the country’s largest financial institution manages currency risk in an environment where access to foreign exchange remains constrained.
A bank’s Net Open Position measures the gap between its foreign currency assets and liabilities. A negative position indicates that a bank’s foreign currency obligations exceed foreign currency holdings. This exposure relates to exchange rate risk rather than the bank’s immediate liquidity position or its ability to meet obligations. In a stable environment, this mismatch can be managed. In an economy facing persistent dollar shortages and pressure on the local currency, it introduces additional risk.
Banks in the Maldives operate within a system where demand for US dollars consistently exceeds supply. Imports dominate consumption, while a significant share of tourism-related foreign currency earnings does not circulate through the domestic banking system. This creates structural pressure on liquidity within the formal financial sector. In this context, a negative dollar position exposes a bank if the MVR currency were to devalue against the US dollar.
BML’s earlier position reflected this imbalance. The Bank was supplying foreign currency for card payments, trade and other financial obligations at a level that exceeded its inflows. This contributed to a growing short position that required active management.
The move towards a near-zero position indicates that the Bank has aligned its foreign currency assets more closely with its liabilities. In practical terms, this reduces direct exposure to exchange rate movements and limits potential loss to the Bank.
This adjustment has occurred alongside continued foreign currency support to customers. According to figures presented at the AGM, BML sold a total of USD 672.5 million, including USD 390 million for debit and credit card transactions and USD 175 million for businesses. These figures reflect BML’s important role in facilitating access to US dollar foreign currency for households and businesses despite ongoing supply constraints.
The situation highlights a broader dynamic within the banking system. Reducing a negative currency position strengthens institutional stability, but the wider economy continues to depend on banks to supply foreign exchange for transactions and imports.
This dynamic is evident in the Maldivian context. The economy’s reliance on imports sustains demand for dollars, while pressures on the Rufiyaa and the presence of a parallel market indicate underlying imbalances in supply. Banks operate within these constraints, balancing regulatory requirements, internal risk considerations and market demand.
BML’s shift to a near-balanced position does not address these structural conditions. It does, however, indicate a change in how risk is managed within the institution. By reducing its exposure, the Bank has reduced US dollar currency risk, while continuing to operate within a system where foreign currency availability remains a broader challenge.
