To strengthening monetary stability and building investor confidence, the Maldives Monetary Authority (MMA) has successfully withdrawn MVR 2.1 billion (equivalent to USD 136.21 million) from the domestic economy through its ongoing open market operations. This is the first such monetary contraction undertaken by the country’s central bank since 2014, reflecting a proactive fiscal and economic strategy to stabilize the Maldivian Rufiyaa (MVR) and manage liquidity in the financial system.
The MMA detailed the achievement in an official press release highlighting key monetary policy measures taken to ensure sustainable macroeconomic health. The operation, launched on 23 July 2025, was part of a carefully planned strategy to counter the excessive liquidity that had entered the economy over the past few years, primarily due to extraordinary monetary measures during the COVID-19 period.
The pandemic era necessitated the suspension of the Fiscal Responsibility Act, allowing emergency fiscal tools such as direct monetization of deficits through currency printing. While these measures provided vital support during a global crisis, they led to a sharp expansion in local currency supply, with Rufiyaa circulation increasing by 178 percent. The funds were later securitized into long-term bonds in three separate issuances to maintain financial market stability.
As a corrective step, the MMA’s recent currency withdrawal signals a return to prudent monetary management and alignment with best practices in central banking. By tightening the money supply, the authority is mitigating inflationary pressure, strengthening exchange rate stability, and restoring equilibrium in the financial system.
According to MMA data, the average volume of Rufiyaa circulating within the banking system stood at MVR 6.9 billion (USD 453.96 million) in June 2025, reflecting a 2 percent year-on-year increase. While Rufiyaa deposits in the banking system rose by 18 percent over the same period, foreign currency deposits have gradually tapered, a trend observed since 2022. Nevertheless, the current trajectory of domestic currency management shows encouraging signs of systemic stabilization.
Additionally, the central bank observed that commercial banks have increased their investment in government-issued Treasury Bills and bonds, resulting in a notable increase in Rufiyaa-denominated lending. This has helped absorb some of the excess liquidity, further reinforcing the monetary tightening efforts. Although foreign currency lending has contracted, the growing uptake of Rufiyaa-based loans underlines confidence in the national currency and banking system.
As the Maldivian economy remains open and heavily reliant on imports, particularly to support its tourism-driven growth, maintaining a stable exchange rate and sound monetary policy is essential. The MMA’s actions demonstrate a strong commitment to fiscal discipline and long-term economic resilience, setting a robust foundation for continued growth and investor confidence.
With these developments, Maldives reaffirms its readiness to support a dynamic financial sector that underpins the country’s global appeal as a safe, stable, and attractive destination, not only for tourists, but also for international investors and economic partners.
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