Maldives’ usable reserves fall 9.6% to $200.6 million in August
Decline in usable reserves was mainly due to the amount of foreign currency sold by the central bank during August exceeding its foreign currency inflows.
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The Maldives’ official reserves increased in August, while usable reserves declined by 9.6 per cent during the month, according to figures released by the Maldives Monetary Authority (MMA).
Monthly reserve data published by the central bank showed official reserves increased from USD 638 million to USD 643.8 million at the end of August, an increase of 0.9 per cent.
Usable reserves, however, fell from USD 221.9 million to USD 200.6 million, a decline of USD 21.3 million, or 9.6 per cent.
According to the MMA, the decline in usable reserves was mainly due to the amount of foreign currency sold by the central bank during August exceeding its foreign currency inflows.
The MMA said its dollar sales to banks increased by 13.8 per cent compared with July. The central bank increased its sales to facilitate access to foreign currency through the banking system and provide additional liquidity to the foreign exchange market.
At the same time, foreign currency received by the MMA through tax and non-tax revenue collected by the Maldives Inland Revenue Authority (MIRA) declined by 14.3 per cent compared with July.
The latest figures come as the government takes several measures aimed at increasing foreign currency flows through the formal financial system.
The foreign currency conversion requirement for resorts was increased this month from 20 per cent to 40 per cent.
The Maldives has also sought a USD 100 million currency swap facility through Malaysia’s central bank. Malaysian Prime Minister Anwar Ibrahim said on Monday that Malaysia had agreed in principle to the proposal and that the central banks of the two countries would work to expedite the arrangement.
Despite the increase in gross official reserves, the current level of usable reserves remains below the equivalent of one month of imports.
Based on monthly import requirements of between USD 357 million and USD 426 million, USD 200.6 million in usable reserves would cover approximately 0.47 to 0.56 months of imports.
A commonly used international benchmark is to maintain reserves sufficient to cover around three months of imports.
