The Maldives Monetary Authority (MMA) has announced additional monetary policy tightening measures aimed at further reducing excess Maldivian Rufiyaa liquidity in the financial system and strengthening the effectiveness of monetary policy operations. The measures form part of the central bank’s continuing efforts to maintain monetary and financial stability while supporting a more resilient environment for sustainable economic growth in the Maldives.
Under measures approved by the MMA Board, the central bank will increase the Minimum Reserve Requirement (MRR) applicable to Rufiyaa deposits and strengthen the use of Open Market Operations (OMO) to absorb surplus liquidity from the banking system. The policy adjustments are designed to ensure that liquidity conditions remain consistent with the country’s broader monetary objectives while enhancing the MMA’s ability to manage domestic financial conditions effectively.
The MMA has decided to increase the Minimum Reserve Requirement for MVR deposits from the current 10.5 percent to 11.0 percent, with the revised rate taking effect from September 2026. The adjustment will require commercial banks to maintain a slightly higher proportion of their Rufiyaa deposits as reserves, contributing to a gradual reduction in excess liquidity available within the banking system.
The central bank has also established a phased approach for further adjustments to the reserve requirement during 2027. Following quarterly reviews by the MMA Board, the MVR Minimum Reserve Requirement is expected to be increased incrementally, with the rate projected to reach 13.0 percent by December 2027. The gradual implementation provides the financial sector with a structured and predictable policy framework while allowing the MMA to assess prevailing economic and liquidity conditions at regular intervals.
Alongside the reserve requirement adjustments, the MMA has decided to increase its Open Market Operations rate by 10 basis points. The measure is expected to strengthen the central bank’s capacity to absorb surplus Rufiyaa liquidity and reinforce monetary conditions across the banking sector.
Open Market Operations were resumed by the MMA in July 2025 as part of its liquidity management framework. Between July 2025 and July 2026, the central bank absorbed an average of MVR 2.7 billion in excess Rufiyaa liquidity from the banking system through these operations, demonstrating the increasing role of market-based monetary policy instruments in managing domestic liquidity.
The implementation of these measures has already contributed to a notable reduction in short-term excess liquidity across the banking sector. According to the MMA, short-term excess liquidity declined from MVR 6.5 billion to MVR 3.7 billion, reflecting progress in bringing liquidity conditions to levels that better support effective monetary management.
The latest policy decisions further reinforce the Maldives’ efforts to strengthen macroeconomic management and enhance confidence in the domestic financial system. A more balanced level of Rufiyaa liquidity can support monetary stability, improve the transmission of central bank policy decisions and contribute to a more disciplined financial environment for businesses, investors and financial institutions.
The measures also complement the Government’s broader focus on strengthening fiscal and economic management, improving institutional resilience and creating sustainable foundations for long-term growth. For an economy that remains closely connected to international tourism, investment and trade, maintaining a stable and effectively managed monetary environment is particularly important for supporting business confidence and safeguarding economic resilience.
Through the gradual tightening of reserve requirements and expanded use of Open Market Operations, the MMA is adopting a measured approach that allows monetary conditions to be adjusted in accordance with developments in the economy. The continued monitoring and quarterly review of the policy framework will enable the central bank to respond appropriately to changing liquidity conditions while supporting the Government’s wider economic priorities and the long-term stability of the Maldivian economy.
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