Maldives Monetary Authority (MMA) has revealed the amount of foreign currency issued to banks has been increased as part of the efforts to supply foreign currency to state-owned enterprises and private businesses.
Governor Ali Hashim said the central bank is taking all possible measures to provide foreign currency on demand, despite the limited injection of foreign currency into the banking system due to the suspension of tourism operations amid the COVID-19 pandemic. In this regard, Hashim said the amount of foreign currency issued to banks has been increased, with a proportion allocated for the purchase of food, medicine and other essential items. He said MMA will arrange the supply of foreign currency within the capacity of the state reserve.
The governor made the remarks after concerns were raised due to the hike 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 said the black market rates have been raised by some currency traders to gain an undue financial advantage, 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 travellers, 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 highlighted the Maldives has received multiple loans from international financial organisations which would help to stablise the exchange rate.