Minister of Economic Development and Trade Mohamed Saeed has said that the government is already working to address the US Dollar (USD) exchange issue.
At a ‘town hall’ style event jointly organised by the President’s Office and state media, Saeed acknowledged that although the official USD exchange rate remains at MVR 15.42, there exists a vast parallel market, or black market, due to USD supply issues.
“There are very targeted works within the President’s efforts. I can assure you that we will work to stabilise the exchange rate hopefully by this year,” Saeed said.
Saeed said the biggest problem faced by small businesses is the high price of dollars in the black market as it is extremely difficult to exchange Maldivian Rufiyaa (MVR) for USD at the official rates.
“You know, the biggest problem facing small businesses is the dollar issue. Dollars are very expensive to buy,” he said.
Bank of Maldives (BML) says its USD support service remains available to all businesses that have active accounts with the bank. However, some traders have speculated through local media that, telegraphic transfers cannot continue to be paid in this way due to the tight USD supply.
While the official exchange rate for US$1 has been set as MVR 15.42 by the Maldives Monetary Authority (MMA), many have to resort to exchanging at higher prices from the black market where rates can vary anywhere between MVR 16 and MVR 19 per US$1.
While observers and experts, for years, have largely agreed that USD supply issues will continue to negatively impact the economy as a whole unless the parallel markets are eliminated and regulations put in place to allow USD to flow through regulated financial institutions no adequate solution has been implemented thus far.