Yameen slams Rufiyaa’s decline: ‘Worth less than toilet paper’

Former president Abdulla Yameen Abdul Gayoom said on Thursday night that the Maldivian Rufiyaa has depreciated to the point where people no longer wish to save in the currency, likening its value to being worth less than toilet paper

Addressing a town hall meeting hosted by his party, the People's National Front (PNF), Yameen said his primary concern is not the appreciation of the US Dollar, stressing that the issue is not that the currency has increased in value.

"We are concerned because the Maldivian Rufiyaa is currently insufficient even for the purchase of toilet paper used in bathrooms," Yameen remarked.

He questioned why anyone would choose to maintain savings in Rufiyaa-denominated bank accounts when the currency has lost significant value in the domestic market. While acknowledging that the Maldivian Rufiyaa remains the country's legal tender under the law, Yameen argued that government "mismanagement" has created a situation in which people no longer wish to retain the currency.

Yameen estimated that the value of the Rufiyaa has fallen considerably and warned that the black market exchange rate for the US Dollar could rise to MVR 25. He said that, beyond the shortage of US Dollars, the greater risk is a complete loss of public confidence in the national currency.

Coinciding with Yameen's remarks, the Maldives Monetary Authority (MMA) announced on Thursday night that it is reinforcing its monetary policy framework by introducing measures aimed at reducing excess liquidity in the economy. The measures include raising the Minimum Reserve Requirement (MRR) for banks and expanding Open Market Operations (OMO).

The MMA stated that the MRR will increase from 10.5 percent to 11 percent beginning next month. In addition, the Authority's board plans to review market conditions every three months, with the goal of gradually increasing the MRR to 13 percent by the end of next year.

The policy adjustments come amid growing public concern over the continued rise in the exchange rate of the US Dollar. Over the past two and a half years, the informal market rate has increased from around MVR 17 to MVR 21.60 per US Dollar.

The current administration has attributed the country's economic challenges to the former Maldivian Democratic Party (MDP) administration. According to government officials, the printing of more than MVR 4 billion during the COVID-19 pandemic resulted in an oversupply of local currency, placing pressure on the dollar market and contributing to rising prices of goods across the country.