Nasheed calls for govt-MDP talks before hyperinflation

Former President and Maldivian Democratic Party (MDP) Chairperson Mohamed Nasheed on Tuesday called on the government to hold talks with the opposition over the foreign exchange situation before the parallel market rate for the US dollar reaches MVR 23 and inflation increases further.

Nasheed made the remarks after Minister of Economic Development and Trade Mohamed Saeed said on Monday night that headlines published by some media outlets were contributing to daily increases in the dollar rate on the parallel market.

In a post on X, Nasheed rejected Saeed's argument, describing it as an attempt to distort the factors affecting the exchange rate.

"The government claiming that the US dollar rate is rising due to people talking about it, or speculation, and attempting to twist reality, is the greatest disservice that can be done to the Maldivian economy at this moment," Nasheed said.

Nasheed said the government could only withhold information about the state of the economy to a certain extent, referring to reports that he said the Maldives Monetary Authority (MMA) and the Ministry of Finance are required to publish.

He argued that the increase in the parallel market exchange rate was the result of a shortage of US dollars relative to demand.

"The MMA knows the amount of dollars in the Maldives, and it knows the demand for those dollars. The MMA also knows the amount of Rufiyaa in circulation and how much Rufiyaa is chasing dollars, which determines the true exchange rate," Nasheed said.

He called on the government to engage with the MDP to discuss measures to address the situation.

"Before hyperinflation takes hold in the Maldives and commodity prices skyrocket completely out of control, it is essential for the government to talk with the MDP. If the government chooses pride, the damage will fall on the Maldives, on the Maldivian people," Nasheed said.

His comments come as the parallel market rate for the US dollar has risen above MVR 22, while the official exchange rate remains MVR 15.42 per dollar.

Other MDP figures have also called for discussions with the government over the exchange rate.

Former Finance Minister Ibrahim Ameer said on Monday night that the state of the economy required discussion rather than political exchanges.

"When your own policies fail and the dollar rate reaches MVR 22.10, if the minister, who makes TikToks and talks nonsense, wishes to present 'both sides', then invite us as well. Or come debate with us," Ameer said.

"This situation is far too critical to be playing politics, telling lies, and wasting time with empty rhetoric."

Hussain Amr, Chair of the MDP's Microeconomic Committee and former Managing Director of State Trading Organisation (STO), has also written to the People's Majlis requesting that the Governor of the MMA be summoned over the foreign exchange situation.

Amr said the parallel market rate had risen from MVR 17.40 in January 2024 to MVR 22.10. He said wages had not increased at the same rate, reducing the purchasing power of households.

"Most goods we consume must be imported using US dollars. When the cost of the dollar goes up, commodity prices go up along with it," Amr said.

The government has maintained that the foreign exchange situation is being managed, while officials have also criticised reporting and public commentary that they say contribute to movements in the parallel market rate.