Traders: Dollar hikes Maldives commodity prices

The persistent surge in market commodity prices is directly correlated with the appreciating value of the U.S. dollar, and a significant reduction in these prices remains elusive until the ongoing dollar scarcity is effectively addressed, Maldivian businessmen asserted on Thursday.

The Maldives, a nation heavily reliant on imported goods, is experiencing a daily escalation in black market dollar rates, which have consistently hovered above MVR 20 for a considerable period. This depreciation of the local currency has led to a dramatic upward shift in commodity prices. For instance, an apple, previously retailed at five Rufiyaa, now commands a price exceeding 10 Rufiyaa.

Abdul Rahman Ghadir, Operations Manager at Ufanveli, a prominent fruit importer in the country, informed Sun that the cost of all imported goods, particularly those requiring dollar-denominated payments, is progressively increasing. He specifically highlighted apples and oranges as experiencing the most substantial price hikes within this category.

Ghadir attributed the escalating prices to extended logistical routes and the acute shortage of foreign currency. He expressed confidence that a resolution to the dollar scarcity would subsequently lead to a reduction in commodity prices.

"Prices will inevitably decline the moment the government facilitates easier access to dollars. That day, everything will become more affordable. If this trend continues, commodity prices will only continue to rise, won't they?" he stated.

Concurrently, a vendor operating in the Local Market corroborated to Sun that the prices of fruits and vegetables have witnessed the most significant increases.

According to this trader, the rise in commodity prices is partly due to the increased cost of fertilizers, which are essential for the cultivation of fruits and vegetables.

He also noted a decline in sales volume, attributing it to a reduction in public disposable income.

Food prices within the city registered a 1.62 percent increase from July to August. Statistical data indicates that fruit prices experienced the most substantial surge, with a month-on-month increase of 6.13 percent and a 10.2 percent rise compared to the previous year.

While the inflation of goods and commodities is intrinsically linked to the dollar's valuation, it's noteworthy that the dollar was at its strongest point in February of last year, subsequent to the current government's assumption of power. The government has consistently maintained that the dollar's value will not appreciate further and is expected to decline.

Last April, President Dr. Mohamed Muizzu declared that the Maldives' dollar crisis would be resolved, and the dollar's value would be brought down to the bank rate before the end of 2027. Prior to this, the President had assured that the dollar would only devalue from its current position and not appreciate further.

Beyond the President's statements, Economic Minister Mohamed Saeed has repeatedly affirmed that the dollar problem would be resolved and its value would decrease. However, the availability of dollars remains constrained, and its value continues to climb.

This ongoing situation directly translates to an increase in the cost of goods and commodities for the general public, who are the ultimate consumers. Public concern is mounting, with many expressing that current salaries, across both public and private sectors, are insufficient to meet escalating living expenses.

In addition to commodity prices, restaurant costs are also experiencing a month-on-month increase. Consequently, there has been a noticeable reduction in patronage at these establishments, reflecting a broader slowdown in the economic landscape.