MMA Governor Highlights Impact of New Foreign Currency Regulations on Banking System

Governor of the Maldives Monetary Authority (MMA), Ahmed Munawwar, emphasized the critical importance of the recently introduced Foreign Currency Regulation in strengthening the country’s banking operations. Speaking at a panel discussion held at the Maldives National University (MNU), Munawwar addressed key aspects of the regulation and its potential effects on the economy, particularly within the tourism and financial sectors.

During the discussion, MMA officials outlined the key provisions of both the Foreign Currency Regulation and the Money Exchange Regulation. Munawwar pointed out that while approximately USD 4.5 billion enters the Maldives annually, only 23% of this amount reaches the central bank through taxes and other official channels. He stressed that the introduction of the new regulations is aimed at curbing the outflow of dollars that bypass the banking system, which could, in turn, boost demand for the Maldivian currency, the Rufiyaa (MVR).

The governor acknowledged that although businesses have welcomed these regulations, there have been widespread calls for clarity on the procedures for depositing and exchanging foreign currency in banks. He highlighted the challenges faced by local banks in meeting the tourism sector’s dollar demands, noting that they often rely on foreign banks to supplement the necessary funds.

Munawwar also revealed that despite the large volume of USD flowing into the country annually, only USD 2 million has been deposited into the Maldivian banking system. He expressed optimism that the new regulations would improve banking operations and increase the volume of foreign currency entering the formal financial system.

According to the Foreign Currency Regulation, tourism facilities registered with the Maldives Inland Revenue Authority (MIRA) must now channel their earnings through local banks. Resorts and safaris are required to exchange USD 500 per guest, while guest houses must exchange USD 25 per guest. These measures are designed to bring more foreign currency into the banking system, helping stabilize and enhance its operations.

To ease the transition, MMA has granted businesses a three-month grace period to comply with the new regulations, aiming to minimize disruptions and avoid placing undue strain on the business community.