Maldives' Foreign Reserves Plunge to Alarming Low of $148 Million USD

Malé, Maldives - The Maldives Monetary Authority (MMA) has revealed that the country's usable reserve has reached a concerning low of $ 168 million USD, according to recent data.

The latest statistics indicate that by the end of June 2023, the total reserve stood at $702 million USD, with only $168 million USD classified as usable.

The year 2023 has witnessed a steady decline in reserves. Starting at $253 million USD in January, the reserves dropped to $235 million USD in February, followed by $200 million USD in March. The situation worsened in April, with a sharp drop to $151 million USD, ultimately settling at the current level of $168 million USD by the end of June. This consistent monthly decline highlights the growing pressure on the Maldivian financial system and raises concerns about potential instability.

The primary cause of this reserve depletion is the Maldivian government's increased printing of the local currency, the Maldivian Rufiyaa. The excessive circulation of the Rufiyaa has resulted in an oversupply within the economy. To maintain the fixed exchange rate of 15.42 MVR per USD, the government has been forced to dip into the central bank's dollar reserves, consequently depleting the foreign reserves.

The discrepancy between the official exchange rate and the black market rate further emphasizes the mounting pressure on the currency. While the official rate stands at 15.42 MVR per USD, the black market rate has escalated to 17.5 Rufiyaa per USD. This disparity signals a growing strain on the Maldivian Rufiyaa and poses additional challenges to the country's financial stability.

With these figures shining a spotlight on the government's economic management, questions arise regarding its ability to safeguard the nation's financial stability amid the ongoing depletion of foreign reserves. Despite the government's insistence on the economy's good health, the substantial decline in reserves necessitates the implementation of prudent measures to mitigate potential economic disruptions.