MMA increases weekly dollar allocations to banks by 51%

The Maldives Monetary Authority (MMA) has decided to increase its weekly US dollar allocations to banks by 51 per cent as part of measures to increase access to foreign currency through the banking system.

The central bank said on Tuesday that the increase will take effect this week and continue for the next three weeks.

According to the MMA, the measure is intended to increase the amount of foreign currency available through banks and address difficulties faced by businesses in obtaining dollars to pay for imports.

The decision comes as the exchange rate for the US dollar in the parallel market has risen to MVR 22.25, while the official exchange rate remains at MVR 15.42.

The MMA said foreign currency inflows into the Maldives have declined since February, placing pressure on the foreign exchange market.

According to the central bank, the decline was partly linked to a fall in tourist arrivals amid conflicts in the Middle East.

The MMA has introduced several measures over recent months to increase the supply of dollars through the banking system and manage the amount of Rufiyaa circulating in the economy.

Ahead of Ramadan, the central bank increased dollar allocations to banks by 32 per cent. The measure was introduced to support businesses importing food and other goods during the period and to help manage prices.

The MMA increased weekly dollar allocations by a further 26 per cent in June to support businesses during the tourism off-season.

The latest 51 per cent increase will remain in effect for three weeks as the central bank seeks to address demand for foreign currency through banks.

The move follows other measures announced by the MMA to address conditions in the foreign exchange market, including plans to tighten foreign currency conversion requirements and measures to absorb Rufiyaa liquidity from the banking system.