The Maldives Monetary Authority (MMA) has absorbed MVR 3 billion from the domestic banking system through Open Market Operations (OMO), reinforcing ongoing monetary policy measures aimed at managing surplus Maldivian Rufiyaa liquidity and supporting stability in the country’s financial and foreign exchange markets.
The measure forms part of the central bank’s broader efforts to strengthen liquidity management within the banking sector at a time when maintaining an appropriate balance between domestic currency liquidity and foreign exchange demand remains important to the wider economy. By absorbing excess Rufiyaa from the financial system, the MMA is seeking to reduce liquidity-related pressures that could contribute to increased demand for foreign currency and place additional pressure on the exchange rate.
After a hiatus of more than a decade, the MMA reintroduced reverse repurchase operations on July 23, 2025, marking the return of an important monetary policy instrument for actively managing liquidity conditions in the financial system. The intervention was introduced to address the impact of elevated surplus Rufiyaa liquidity, which had contributed to stronger demand for foreign currency and increased pressure on the Rufiyaa exchange rate.
The impact of the measures has become increasingly evident, with surplus Rufiyaa liquidity in the banking system declining by 39 percent by the end of June 2026. Average surplus liquidity, which stood at approximately MVR 7.0 billion in June 2025, declined to around MVR 4 billion by the end of June 2026, representing a substantial adjustment in liquidity conditions within a year.
The reduction demonstrates the growing effectiveness of the monetary policy tools being deployed to manage excess funds circulating within the banking system. A more balanced level of liquidity can contribute to improved monetary transmission, reduce unnecessary pressure on foreign currency demand and support greater stability across the domestic financial market.
The MMA has also progressively strengthened its monetary operations through additional policy measures. Main Liquidity Operations (MLO) commenced in December 2025, further developing the framework available to the central bank for managing short-term liquidity conditions and maintaining orderly functioning of the banking system.
The commencement of MLO followed an upward adjustment in November 2025 to the rates applicable across all tenors of Structural Liquidity Operations, with rates increased by 100 basis points. The MMA subsequently raised the applicable rates by an additional 10 basis points in August 2026, reflecting the continuation of a calibrated approach to monetary and liquidity management.
Together, these measures represent a more active framework for managing domestic liquidity and addressing pressures affecting the Rufiyaa and the foreign exchange market. The absorption of MVR 3 billion through Open Market Operations further demonstrates the authorities’ continued focus on maintaining financial stability while supporting sustainable economic management.
Effective liquidity management is particularly important for the Maldives as the economy has significant foreign currency requirements arising from international trade, development activity and the operations of its globally connected tourism and services sectors. Managing excessive Rufiyaa liquidity can help moderate additional demand for foreign exchange while providing a more stable monetary environment for businesses, financial institutions and consumers.
The Government’s broader economic management agenda, supported by the monetary policy actions of the MMA, continues to place emphasis on strengthening macroeconomic stability, improving the resilience of the financial system and creating conditions conducive to sustainable economic growth. The continued deployment of structured liquidity management instruments is expected to strengthen the monetary policy framework and provide the central bank with greater flexibility in responding to evolving domestic and external economic conditions.
With surplus banking-sector liquidity already recording a significant reduction compared with the previous year, the latest MVR 3 billion absorption signals the continuation of a disciplined approach to monetary management. The measures are expected to contribute to a more balanced domestic financial environment while supporting ongoing efforts to safeguard the stability of the Maldivian Rufiyaa and strengthen confidence in the country’s economic and financial system.
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