The Maldives Monetary Authority (MMA) recorded an improvement in its foreign currency position in October, with foreign currency cash and bank balances recovering from the decline seen in September, reflecting a stronger external asset position for the central bank.
MMA’s foreign currency assets increased by 6.5 percent compared with September, reaching MVR 11.81 billion in October. The increase was mainly driven by higher foreign currency cash and bank balances, while the value of foreign securities also rose during the month. This marked a partial recovery from September, when the central bank recorded lower holdings of cash and securities while maintaining a larger amount in short-term lending to commercial banks.
The improvement comes as the Government continues to place emphasis on strengthening the country’s foreign exchange position, improving external sector resilience and maintaining sufficient foreign currency availability to support national economic activity. A stronger central bank foreign currency position is particularly important for an import-dependent economy such as the Maldives, where businesses and essential service providers rely heavily on overseas payments.
At the same time, the MMA recorded a notable increase in its foreign currency liabilities, primarily due to higher amounts payable to the Asian Clearing Union. The amount owed under the regional payment mechanism increased from MVR 465 million in September to MVR 1.09 billion in October, returning to approximately the level recorded in August.
The Asian Clearing Union facilitates the settlement of cross-border payments between participating central banks by allowing transactions to be offset against each other before the outstanding balance is settled periodically. As settlements are conducted at specified intervals, the amount payable can fluctuate significantly between individual months and does not necessarily represent a sustained increase in external obligations.
After accounting for foreign currency liabilities, MMA’s foreign currency assets exceeded its liabilities by MVR 2.36 billion in October, improving from MVR 1.92 billion in September. Although the figure remained below the MVR 2.54 billion recorded in August, the October performance indicates that the central bank recovered a significant portion of the decline experienced during the previous month despite higher regional settlement obligations.
The improvement is also significant for the wider business sector, particularly companies that depend on foreign currency to settle payments for imported goods, services and overseas suppliers. Foreign currency availability remains an important factor in supporting trade, investment and day-to-day commercial activity across the Maldives.
The latest officially published reserve figures currently cover September, when the Maldives held USD 547.8 million in official reserves, while usable reserves stood at USD 169.8 million. The publication of October reserve figures will provide a clearer indication of whether the improvement recorded in MMA’s foreign currency balance sheet also translated into a stronger level of foreign currency available to meet the country’s external payment requirements.
The October recovery nevertheless provides a positive indication of strengthening foreign currency assets and improving balance sheet conditions at the central bank, supporting the Government’s broader efforts to reinforce external financial stability and maintain confidence in the Maldivian economy.
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