The Bank of Maldives (BML) has refuted claims that it might be looking to stop or limit US Dollar (USD) support for businesses. The response follows speculation in local media that the bank is nearing a situation where it may no longer be able to provide USD for telegraphic transfers (TTs) issued by businesses to buy goods overseas.

Some traders had speculated through local media that, due to the tight supply of USD, TTs cannot continue to be paid in this way. However, a bank official, while acknowledging that there are some difficulties attributable to USD supply, confirmed that USD support would not be stopped.

BML’s USD support service had been available to all businesses that have active accounts with the bank, with TTs going through so far — BML has not placed a stated limitation on USD support amounts for TTs.

“The Bank of Maldives has been providing US dollar support to customers based on the amount of dollars available to the bank at the time. However, this assistance is based on the proportion of dollars in the bank’s reserves,” the bank official said.

Despite the difficulties, BML assured that there will be no fluctuation in funds with any USD account nor changes to any current standards of operation. There will be no difficulty in transfers with adequate USD funds in the account, the bank further confirmed.

In February 2023, BML lifted some USD restrictions imposed during the pandemic, allowing customers to withdraw US$1,600 per day from ATMs and conduct transactions of up to US$3,000 per day with debit cards, sepcifically for customers who had set up USD accounts as their primary debit account. Limitations placed on bank cards and other restrictions on foreign transactions for individuals largely still remain in place. The bank continues to sell, as per government directive, US$500 each to overseas travellers.

The limited USD supply has been a major problem in the Maldives of late. While the official selling price of USD has been set at MVR 15.42 by the Maldives Monetary Authority (MMA), many are forced to buy USD at higher prices from the parallel market at upwards of MVR 18 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.