Yameen: Black market exists because govt failed to manage dollar supply

Former President Abdulla Yameen has said the existence of a parallel market for US dollars reflects a government's failure to maintain the official exchange rate.

Speaking at a People's National Front (PNF) gathering on Sunday night, Yameen responded to remarks made by Government Spokesperson Mohamed Hussain Shareef during a press conference on Saturday.

Shareef had said the government had released a substantial amount of foreign currency to the market and argued that the operation of the parallel dollar market was not the government's responsibility.

Rejecting that position, Yameen said a parallel market develops only when the state is unable to maintain the official exchange rate.

"If the spokesperson said that, then he clearly does not understand how this works. A black market only surfaces when the government fails. If the dollar cannot be sustained at the official Maldivian exchange rate, that is exactly when a black market is born. Otherwise, there would be no room for a black market to exist in the first place," Yameen said.

According to Yameen, maintaining the exchange rate between the Maldivian rufiyaa and the US dollar is a responsibility assigned to the Maldives Monetary Authority (MMA).

He argued that if the government cannot keep the exchange rate stable, it indicates that the country does not have sufficient foreign currency to meet demand.

Yameen also said that claims the government had released enough dollars to meet the needs of individuals and businesses were inconsistent with current market conditions.

He warned that governments cannot sustain development projects while failing to manage broader economic conditions.

"Consequently, it is the government's failure that forces citizens to seek alternative means just to meet their essential, everyday needs. Relying on the police to go out and catch black market dealers in this situation will do nothing but create more criminals," he said.

The parallel market exchange rate for the US dollar has recently risen above MVR 20.5, widening the gap with the official exchange rate and increasing the cost of imported goods.