Dollar inflows to banks in the Maldives have surged by 21% in the first half of 2025, according to the latest report by the Maldives Monetary Authority (MMA). This increase follows major foreign exchange reforms introduced at the beginning of the year, reflecting the country’s ongoing efforts to strengthen its monetary system and foster a more resilient and inclusive economy.
The reform, enacted under the Foreign Exchange Act, came into force on 1 January 2025. A key provision of the Act mandates all tourism establishments to exchange or deposit their US dollar earnings into local banks. This policy is designed to improve transparency in foreign currency flows and reduce the country’s reliance on informal market transactions, where the US dollar has previously appreciated beyond official rates.
Since the implementation of this new regulation, USD 364 million has been deposited into Maldivian banks. This marks a clear departure from the trends of the past four years, during which only 10% of foreign exchange inflows were routed through the formal banking system. As of June 2025, that figure has more than doubled to 21%, underscoring the success of the reforms.
One of the key goals of the initiative is to increase the availability of foreign currency to small and medium-sized enterprises (SMEs) by up to 50%. The MMA has already taken steps in this direction by enabling banks to allocate up to 30% of telegraphic transfer (TT) foreign currency requirements, a significant rise from the previous 5%. The central bank plans to raise this threshold to 50%, further enhancing access to foreign exchange for businesses operating in sectors such as trade, manufacturing, and services.
In addition to enhancing SME access, the foreign currency accumulated under the MMA’s mandate is being strategically utilized. Of the total foreign exchange inflows, 90% is directed to the central bank, with 60% of this amount allocated for critical national needs such as debt repayment, essential imports (including fuel and staple foods), and reserve strengthening.
As of June 2025, USD 174 million has already been spent on debt servicing, representing a 51% increase compared to the same period last year. A further 30% of the foreign exchange routed through the MMA is redistributed to commercial banks to support market interventions, ensuring broader availability of currency to the public and the private sector.
The MMA has reiterated that these reforms are not just about macroeconomic management, but also about equitable distribution. By redirecting foreign exchange through the formal system and supporting businesses, particularly SMEs, the reforms are expected to improve the resilience of the domestic economy and stabilize market dynamics in the long run.
Moreover, these measures are expected to bear fruit as the broader economic reforms and stabilization policies gain traction. According to the central bank, changes in the country’s foreign exchange policy have been carefully crafted to ensure the sustainability of dollar liquidity, while supporting national development goals and economic recovery efforts.
For foreign tourists and investors, these developments signal a strengthening financial ecosystem in the Maldives, an assurance that the country remains not only a premier travel destination but also a secure and increasingly transparent environment for business and economic activities.
Summary of Achievements:
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21% increase in dollar inflows to banks post-forex reforms.
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USD 364 million deposited into banks since January 2025.
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Foreign exchange access for SMEs increased from 5% to 30%, targeting 50%.
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USD 174 million used for debt repayment, a 51% rise from last year.
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Forex inflow to MMA utilized for essential imports and national reserves.
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Continued government focus on enhancing currency stability and SME growth.
This successful transformation of the country’s foreign exchange landscape reflects the Maldives’ proactive approach to economic governance and is a positive signal for the global tourism and investment communities.
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