The Maldives Monetary Authority (MMA) has announced a 10 percent increase in the amount of US dollars allocated to local banks for commercial transactions, including Telegraphic Transfers (TT) and Letters of Credit (LC) used for import payments. The move, which took effect this week, is aimed at easing access to foreign currency for small and medium-sized enterprises (SMEs).
According to the MMA, the adjustment has resulted in a 40 percent increase in the amount of dollars available to SMEs through commercial banks. The central bank stated that the objective is to ensure a more consistent and equitable distribution of foreign exchange to businesses via weekly sales.
This policy change follows a revision made in June, which required banks to sell 90 percent of their weekly foreign currency intake to the central bank, up from the previous 60 percent. However, the MMA clarified that 30 percent of the total is returned to banks each week, earmarked for specific purposes such as supporting essential public needs and food imports. A considerable portion of this returned amount is directed toward facilitating SME access to foreign exchange.
Under the recently amended Foreign Exchange Act, 30 percent of the dollars sold through banks are now reserved for SMEs. The MMA has also indicated plans to increase this allocation to 50 percent in the future, in a continued effort to support the sector.
The changes come amid rising pressure on the parallel market, where the dollar exchange rate has climbed to MVR 20 per dollar. While the MMA’s latest move may offer some relief to businesses struggling with currency access, its long-term impact on the broader foreign exchange situation remains to be seen.
