Maldives Monetary Authority (MMA) has raised by another 10 percent, the amount of USD allocated to be issued to local banks to facilitate more support for local businesses.
According to information received, the change will take effect from this week, which will enable banks to increase the proportion of USD made available to small and medium enterprises to 40 percent. The move is aimed at alleviating the difficulties faced by business to acquire foreign currency at present.
In June, MMA revised its policy, making it mandatory for local banks to raise foreign exchange requirement from the previous 60 percent to 90 percent. MMA utilizes 60 percent of the proceeds for various government foreign currency obligations and to increase foreign reserves.
However, according to the MMA, with the recent change, it has been selling the extra 30 percent back to the banks every week. The portion has been designated for specific purposes, including essential public needs, food imports and to provide foreign exchange assistance to small and medium enterprises, MMA said.
The primary aim of the change is to ensure that banks can facilitate the foreign exchange requirements of local businesses through weekly foreign exchange sales in a more robust and equitable system.
Under the Foreign Exchange Act, with the amendment to the Foreign Exchange Regulations, the proportion of dollars sold through banks to small and medium enterprises is now at 30 percent which the central bank aims to take up to 50 percent.
The Foreign Exchange Act, which requires tourism establishments to exchange or deposit their US dollar revenue to local banks, came into effect on 1 January this year. Since the introduction of the Foreign Exchange Act, USD 364 million has been deposited with banks as of June this year.
This year, USD 174 million has been utilized for debt repayment, marking a 51 percent increase compared to the same period last year
