Maldives Monetary Authority (MMA) has withdrawn MVR3 billion through open market operations to reduce excess rufiyaa liquidity in the banking system.

The central bank resumed reverse repurchase operations on 23 July last year, after a gap of more than 10 years. The move was aimed at mitigating pressure on the rufiyaa exchange rate as excess liquidity increased and demand for foreign currency rose.

As a result, excess rufiyaa liquidity in the banking system fell by 39 percent by the end of June.

According to the MMA, excess liquidity declined to about MVR4 billion at the end of June this year, from an average of MVR7 billion in June last year.

MMA introduced Main Liquidity Operations (MLO) in December last year. In November, MMA also increased the rates for all tenors of its structural liquidity operations by 100 basis points, followed by a further 10-basis-point increase this August, MMA said.