MMA moves to reduce excess money in the economy as part of new tightening measures

The Maldives Monetary Authority (MMA) has decided to further tighten its monetary policy and introduce new measures to reduce the surplus liquidity of the Rufiyaa circulating in the economy.

In a statement, the MMA said its board has approved two major steps aimed at controlling excess money supply: increasing the minimum reserve requirement (MRR) that banks must hold with the MMA, and expanding open market operations (OMOs) to absorb more liquidity from the banking system.

Under the decision, the MRR will rise from 10.5 percent to 11.0 percent starting September. The MMA board will then conduct quarterly market reviews and gradually increase the MRR to 13 percent by December 2027.

The MMA has also decided to increase OMOs by 10 basis points.

According to MMA data, since OMOs resumed in July 2025, an average of MVR 2.7 billion has been withdrawn from excess liquidity in the banking system up to July 2026. As a result, short-term liquidity has fallen from MVR 6.5 billion to MVR 3.7 billion.

The decision comes at a time when the value of the US dollar has sharply increased in the Maldivian market. Over the past two and a half years, the dollar has risen from MVR 17 to MVR 21.60.

The government attributes the rise to the previous MDP administration’s decision to print more than MVR 8 billion during the COVID-19 pandemic, saying it contributed to pressure on the dollar market. The appreciation of the dollar has also driven up commodity prices in the Maldives.