Saeed: Increase in USD rates influenced by media headlines

Economic Minister Mohamed Saeed, on Monday night, while acknowledging the existence of a black market for US dollars in the Maldives, has attributed daily increase in the exchange rate are being significantly influenced by sensationalist media headlines.

Speaking at Economic Ministry’s 'Igthisoadhuge Dhe Faraiy' (Two Sides of the Economy) forum, broadcast via state media, Minister Saeed referred to reports indicating that the dollar rate had increased between MVR 21 and MVR 23 on different days. He noted that some news outlets publish headlines reporting rates as high as MVR 22 early in the morning, describing such coverage as "panic-inducing," "fake news," and a form of market "manipulation."

"When a headline suggests the dollar rate is MVR 22 first thing in the morning, the resulting economic impact or 'blunt force' on such a small economy is substantial," the Minister remarked.

Echoing these concerns, Ibrahim Shimad, Managing Director of STO, stressed that reporting that portrays the dollar price as continually rising has a detrimental impact on the broader economy.

"Creating a negative image targeted at the government through these headlines ultimately impacts the broader economic stability," he said.

During the forum, Mohamed Firaq, head of Inner Maldives, emphasized the need to acknowledge the reality of the black market. He noted that, unlike in many other countries, a significant proportion of foreign exchange transactions in the Maldives is conducted through the unofficial market. He further clarified that the issue is not an absolute shortage of US dollars, but rather that businesses are compelled to obtain them at an "artificial price," with an additional markup of approximately 35 percent.

Responding to Firaq's observations, Minister Saeed questioned whether it is responsible for media outlets to trigger market reactions by reporting elevated exchange rates prematurely.

Firaq also called for the modernization of the country's monetary policy and a transition towards a "single currency economy." He noted that Maldivians are not the only parties utilizing the available supply of US dollars, highlighting significant "leakages" resulting from expatriates operating undocumented businesses. He urged the government to introduce urgent policy reforms to address these concerns, noting that trading foreign currency at inflated rates is considered a criminal offense in many jurisdictions.

While the official exchange rate in the Maldives remains pegged at MVR 15.42, rates offered by private money changers and the black market remain significantly higher. At the beginning of this week, the black market exchange rate for the US dollar was reported to have reached MVR 22.10.