Maldives Monetary Authority (MMA) has revealed the number of foreign currencies issued to banks has been raised as part of the attempts to provide state-owned enterprises and private businesses with foreign currency.
Governor Ali Hashim stated the central bank is taking all possible steps to supply the foreign currency on demand, despite the limited income of foreign currency into the banking system due to the banning of tourism operations amid the COVID-19 pandemic. Hashim also said the amount of foreign currency issued to banks has been increased, with a proportion assigned for the purchase of food, medicine, and other essential items. He said MMA will organize the supply of foreign currency within the volume of the state reserve.
The governor made the remarks after concerns were raised due to the rise in currency exchange rates in the black market. Citing the limited availability of foreign currency due to COVID-19, black market rates have climbed up to MVR 18 although the bank rate is MVR 15.42 for USD 1.
However, MMA stated the rates of parallel-market have been raised by some currency traders to obtain an undue financial profit, noting the demand for foreign currency has not increased. In this regard, the central bank said foreign currency demand mainly comes from import businesses and international travelers, both of which have reduced significantly due to COVID-19.
Earlier, MMA revealed funds amounting to USD 150 million had been obtained under the currency swap agreement signed between MMA and the Reserve Bank of India (RBI). MMA also noted the USD 50 million loan facility approved by the International Finance Corporation (IFC) to the Bank of Maldives (BML) would also provide relief to the foreign currency market.
The central bank further reveals the Maldives has received multiple loans from international financial organizations which would help to stabilize the exchange rate.