MMA hikes dollar allocation to banks for commercial use

The Maldives Monetary Authority (MMA) has announced a 10% increase in the amount of US dollars issued to Maldivian banks for commercial transactions, including Telegraphic Transfers (TT) and Letters of Credit (LC) payments related to imports.

According to the MMA, the change is effective from this week. As a result, banks will be able to increase their dollar sales to small and medium enterprises (SMEs) by 40%.

The parallel market exchange rate has recently risen to MVR 20 per dollar.

In June, the MMA revised its policy requiring banks to sell 90% of their weekly foreign exchange to the central bank, up from the previous 60%. However, the MMA clarified that it returns the additional 30% back to the banks each week.

The MMA stated that the primary goal of this policy is to improve the distribution of foreign exchange to businesses in a consistent and fair manner through regular weekly sales.

The returned 30% is allocated for specified purposes, which include meeting essential public needs and supporting food imports. A significant portion of these funds is used to assist SMEs in accessing foreign exchange.

With recent amendments to the Foreign Exchange Act, the proportion of dollars sold through banks to SMEs has been fixed at 30%. The MMA has stated its intention to raise this allocation to 50% in the future to further support SMEs in the country.