MDP calls for dollar rate to fall to MVR 19 in 10 days, MVR 17 in a month

The opposition Maldivian Democratic Party (MDP) on Wednesday called on the government to bring the market exchange rate for the US dollar down to MVR 19 within 10 days and to MVR 17 within one month.

MDP Chairperson and former President Mohamed Nasheed announced the demand at a press conference held at the party's headquarters on Wednesday. He said it would be one of the main demands of the MDP's protest scheduled for Thursday night.

"We are asking the government to reduce the price of the dollar to MVR 19 within the next 10 days. Furthermore, we are calling for it to be reduced to MVR 17 within one month. That MVR 17 rate was the prevailing market rate when this administration assumed office," Nasheed said.

The official exchange rate remains MVR 15.42 per US dollar, while the rate in the parallel market has risen above MVR 22 in recent days.

Nasheed said an MDP government would be able to reduce the market rate and argued that the measures required to address the issue were established in economic policy.

He said the continued increase in the exchange rate would feed into the prices of imported goods and warned that the Maldives could face further inflation if the trend continued.

Nasheed disputed claims by government officials that reports about the shortage of dollars were being driven by rumours or media coverage. He said there was a shortage of foreign currency in the market and that the reasons behind it were known.

He identified government expenditure as one of the factors contributing to the pressure on the foreign exchange market, saying public spending remained too high and that expenditure on activities that were not necessary should be reviewed.

Nasheed also cited the lack of progress on debt restructuring and the absence of foreign currency inflows through dollar-denominated bond issuances as factors affecting the exchange rate.

The MDP chairperson also criticised the government's proposed amendment to the Foreign Exchange Act, which would remove the option allowing resorts to meet their foreign exchange conversion requirement by exchanging $500 per tourist arrival.

Under the current law, resorts can either convert $500 for each tourist arrival or exchange 20 per cent of their monthly foreign currency revenue through domestic banks. The proposed amendment would remove the per-tourist option and require resorts to convert 20 per cent of their revenue.

Nasheed said increasing state intervention in private businesses and imposing further requirements on investors could discourage investment and reduce foreign currency inflows.

However, he welcomed the government's proposed Residency Programme, saying it could provide another avenue for bringing foreign currency into the Maldives. He called for the programme to be implemented without delay.

The MDP's demand comes as the exchange rate in the parallel market has become a focus of political and economic debate, with opposition figures calling for changes to fiscal and monetary policy while the government and the Maldives Monetary Authority introduce measures aimed at increasing foreign currency availability and reducing Rufiyaa liquidity.