Maldives' Official Reserves Decline by 7% in July

The official reserves of the Maldivian government experienced a 7% decline in July compared to the previous month, according to data released by the central bank Maldives Monetary Authority (MMA).

The MMA reported that official reserves stood at USD 775 million in July, representing a decrease of USD 57 million from the USD 832 million recorded in June.

Official reserve figures for the year are as follows:

• January: USD 708 million

• February: USD 832 million

• March: USD 791 million

• April: USD 856 million

• May: USD 816 million

Concurrently, Maldives' foreign exchange reserves also saw a reduction, falling to USD 767 million in July from USD 825 million in June.

The MMA has acknowledged the ongoing challenges, noting a rise in Maldives' debt, a decline in foreign exchange reserves, and an appreciating dollar. Despite a recovery in tourism, which is contributing to increased foreign exchange earnings year-on-year, the authority cited several factors for the reserves not reaching optimal levels. These include higher oil expenditures and increased dollar sales by the MMA through banks to facilitate foreign debt repayment by government-owned companies, as well as for private and public purposes.

In response to the depreciating Rufiyaa and to curb exchange rate appreciation, the MMA has implemented a new foreign exchange rule. This initiative aims to retain foreign exchange earned from tourism within the country, thereby reducing excess currency circulation in the banking system by MVR 2.1 billion.

A significant increase in foreign reserves was previously observed due to the receipt of USD 400 million under an agreement signed with the Reserve Bank of India on October 24 of the previous year.