MMA to take 90 percent of dollars exchanged via banks

Maldives Monetary Authority (MMA) has revised its regulations, now requiring banks to give 90 percent of the US dollars they exchange to the central bank.

According to Mihaaru, this change has been communicated to the banks.

According to the MMA Act, a certain percentage of foreign currency exchanged by banks would need to be sold to the central bank, with MMA reserving the right to determine the percentage.

This year, the government has to repay USD one billion of its debt, which includes the currency swap facilitated by the Government of India.

This USD 400 million currency swap facility was taken through the Reserve Bank of India (RBI) on October 22 last year to increase foreign exchange reserves. The term of the currency swap facility was six months.

According to Mihaaru it had been agreed to rollover the facility for a further three months, meaning Maldives would have to repay it back by July.

Next year, Maldives would need to repay about USD 1.1 billion, marking the largest debt repayment in Maldives' history. This accounts of USD 500 million in sukuk payments and USD 100 million issued as a private bond placement.

MMA first mandated tourism service providers to exchange US dollars with local banks last year via a regulation. Later, a law was passed to implement the move.

Under the Foreign Exchange Act, since January, Category A resorts have been given the option of exchanging USD 500 per tourist or 20 percent of their total revenue each month.

Under "Category B," guest houses are required to exchange USD 25 per tourist, or 20 percent of their monthly income.

According to President Dr. Mohamed Muizzu, the amount of USD exchanged under the law has reached USD 150 million as of March's end.