Governor asserts no change to dollar exchange rules

Governor of the Maldives Monetary Authority (MMA) Ahmed Munawwar has reaffirmed that there will be no changes to the current rules regarding the exchange of dollars in the banking system. He made this statement while addressing allegations that the regulation requiring tourist establishments to exchange USD 500 per tourist had been amended.

During a press conference at the MMA, Governor Munawwar clarified that the MMA’s role in the foreign exchange market was limited due to the absence of a comprehensive foreign exchange law. He noted that the MMA has limited powers and highlighted that a law is being drafted to address this gap. The Governor explained that the inflow of dollars to banks in the foreign exchange market has declined significantly, prompting the need for legal reform.

He stated, “The tourism industry is only contributing about 3% to the banks. On average, not even 10%. So banks are not functioning as they should. If dollars don’t flow into the banking system, we won’t be able to provide the services needed for the people and businesses.” He further emphasised the need to improve the inflow of dollars, with a target to return the foreign exchange market to its pre-pandemic levels.

Governor Munawwar explained that the formulation of a foreign exchange law is critical at this time, noting the need for changes to gradually bring the system back to a stable state. He also expressed gratitude towards President Dr. Mohamed Muizzu for his support in the enactment of such a law.

The Governor also addressed concerns about foreign currency availability, pointing out that many countries have successfully injected foreign currency into their banking systems to help citizens and businesses access dollars more easily. He explained that the Maldives receives about USD 1 billion annually, with around USD 800 million allocated to oil imports. Additional dollar usage include: USD 25 million for staple goods, USD 25 million for health-related costs, USD 10 million for Hajj and Umrah, USD 45 million for students studying abroad and 500 for each Maldivian traveling abroad.

Governor Munawwar clarified that the dollars given to each Maldivian traveling abroad are not provided by Bank of Maldives (BML) but are sourced from state reserves. He also mentioned that the new foreign exchange law would allow the dollar allocation for overseas travel to be increased in line with the law and regulations.

In conclusion, the Governor reiterated that the rule requiring the exchange of USD500 per tourist would not be changed, with the only adjustment being the addition of a non-tourist category to the existing regulations.