The Maldives Monetary Authority (MMA) has increased the weekly supply of US dollars allocated to commercial banks by 51 per cent for the next three weeks, strengthening access to foreign currency for businesses and supporting the continued flow of essential imports into the Maldives.
The temporary increase is intended to improve the availability of foreign currency for importers, particularly small and medium-sized enterprises, while supporting businesses that rely on telegraphic transfers and letters of credit to settle international payments. The measure is expected to provide additional flexibility to companies facing higher demand for US dollars and help maintain the smooth movement of goods into the country.
The latest adjustment forms part of a series of measures introduced by the Government and the MMA to manage foreign currency liquidity and protect the wider economy from external pressures. Foreign currency inflows have remained under pressure since February, with the MMA attributing part of the decline to weaker tourism activity following unrest in the Middle East, which affected international travel patterns and reduced the volume of dollars entering the Maldivian economy.
Tourism Ministry statistics showed that tourist arrivals declined by 20.7 per cent year-on-year in March, while daily arrivals on certain days fell by as much as 50 per cent compared with the corresponding period of the previous year. As tourism remains the Maldives’ largest generator of foreign currency earnings, changes in visitor numbers and tourism receipts can have a direct impact on the availability of US dollars within the domestic banking system.
Despite these external challenges, the Government has continued to introduce targeted measures to maintain foreign currency availability for businesses and safeguard the supply of essential goods. During Ramadan, the dollar allocation provided to banks was increased by 32 per cent to support the import of essential food products and other necessities required by households and businesses during the period.
A further 26 per cent increase in dollar allocations was introduced in June to support businesses during the tourism off-season, when foreign currency inflows traditionally experience seasonal pressure. The latest 51 per cent increase represents a further strengthening of these interventions, providing additional dollar liquidity through the formal banking system at a time when businesses are seeking improved access to foreign currency.
The Government’s approach is particularly important for small and medium-sized businesses, which may have fewer alternative sources of foreign currency compared with larger companies. Improved access through banks can assist these businesses in meeting overseas supplier payments, purchasing inventory, maintaining operations and managing costs more effectively.
At the same time, the MMA is working on longer-term measures aimed at strengthening the circulation of foreign currency within the domestic financial system. The authority has proposed amendments to the Foreign Currency Act that would revise the foreign currency conversion requirement applicable to tourist resorts.
Under the proposal submitted to the Attorney General’s Office, the existing option allowing resorts to convert USD 500 per tourist would be removed. Resorts would instead be required to convert 20 per cent of their foreign currency revenue, establishing a single revenue-based conversion requirement across the resort sector.
The proposed framework is intended to create greater consistency in how foreign currency earnings generated by resorts contribute to the domestic banking system. The Maldives’ resort sector includes a wide range of properties, from established international hospitality brands to premium and ultra-luxury resorts where accommodation rates can reach several thousand US dollars per night.
Because the existing framework allows resorts to meet their conversion requirement based on a fixed amount per tourist, the proportion of total revenue converted into the domestic banking system can differ significantly between properties. This is particularly relevant for high-end resorts that generate substantially higher revenue per guest through accommodation, dining, recreational activities and other tourism services.
The MMA has indicated that the current USD 500 per tourist option can result in luxury resorts converting a comparatively smaller share of their overall foreign currency earnings than other tourism establishments. Requiring resorts to convert 20 per cent of foreign currency revenue would therefore align the requirement more directly with the scale of each property’s earnings.
The proposed change could also support a stronger and more predictable flow of US dollars into the formal financial system, while allowing the country to benefit more broadly from the foreign currency generated by its high-value tourism industry. The resort sector remains a central pillar of the Maldivian economy, attracting visitors from major international markets and generating substantial foreign exchange through accommodation, services and tourism-related expenditure.
Strengthening the contribution of resort-generated foreign currency to the domestic banking system is expected to complement the Government’s broader efforts to improve access to dollars for importers, businesses and other sectors of the economy. A more stable supply through official banking channels can also help businesses plan international payments with greater certainty.
The latest measures come as the parallel-market exchange rate has risen above MVR 22 per US dollar, reflecting continued demand for foreign currency outside the formal banking system. As the Maldives depends heavily on imported food, construction materials, consumer goods, machinery and other essential products, sustained increases in the cost of foreign currency can translate into higher operating expenses for businesses and additional pressure on household prices.
By increasing dollar allocations to banks while pursuing reforms to improve foreign currency conversion from the tourism sector, the Government and the MMA are seeking to strengthen liquidity, support businesses and improve the availability of foreign currency through regulated financial channels.
The measures also reflect a broader effort to manage the effects of temporary external pressures while preserving economic activity and supporting the private sector. With tourism continuing to serve as the country’s primary source of foreign currency earnings, measures that improve the circulation of tourism-generated dollars through the domestic banking system are expected to play an important role in strengthening the Maldives’ foreign exchange position and supporting sustainable economic stability.
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