MMA stops circulation of MVR 3B under operation to stabilize MVR value

Statistics released by the Maldives Monetary Authority (MMA) show that approximately MVR 3 billion has been removed from circulation so far under the Open Market Operations (OMO) introduced to stabilize the declining value of the Maldivian Rufiyaa.

The value of the Rufiyaa has depreciated considerably, with the US Dollar continuing to trade at over MVR 20 on the black market—a rate that has persisted for nearly a year.

In July last year, the MMA initiated Open Market Operations aimed at absorbing excess liquidity from the market, which had accumulated due to several factors, including money printing during the COVID-19 pandemic. According to MMA figures, the operations have so far succeeded in removing approximately MVR 3 billion from circulation.

Data from the central bank indicate that a total of MVR 14 billion printed over various periods remains in circulation. The government has previously identified this excess liquidity as one of the key factors contributing to the sharp rise in the value of the US Dollar.

Reverse Repurchase operations are being carried out specifically to reduce excess liquidity within the banking system. Under this mechanism, the central bank sells securities, including government bonds, to banks and financial institutions with an agreement to repurchase them at a higher price within a specified period. The process effectively reduces the amount of cash circulating in the banking system.

Although the Maldives officially maintains the exchange rate at MVR 15.42 per US Dollar, many Maldivians continue to depend on the black market to obtain foreign currency for purposes such as international transactions and overseas medical treatment. The black market exchange rate has remained above MVR 20 for roughly one year.

In April last year, President Dr. Mohamed Muizzu stated that the dollar shortage facing the Maldives would be resolved, with the goal of bringing the black market exchange rate in line with the official bank rate by the end of 2027. The President had also previously assured that the dollar rate would decline and would not continue to increase. 

However, any reduction in the market value of the US Dollar has yet to materialize.