The Maldives Monetary Authority (MMA) said that a total of USD 993.7 million was injected to the domestic market in 2022, indicating a 53 percent increase compared to the previous year.
The central bank attributed the surge to the significant increase in US dollar sales to cater to the rising foreign exchange demand of the public and state-owned enterprises (SOEs).
The largest proportion of the total US dollar sales was made to SOEs at USD 726.0 million, which accounted for 73 percent of the total. This was an annual increase of 90 percent, largely due to the rise in global oil prices and the increase in the cost of external borrowings.
MMA continued to allocate US dollars to commercial banks to meet the foreign exchange demand of public and local businesses. US dollar sales to commercial banks amounted to USD 267.7 million, making up 19.3 percent of the total and a 1 percent increase from 2021.
The central bank allocated USD 158.1 million as normal weekly allocations, and another USD 33.3 million for Maldivians traveling abroad for medical and educational purposes.
Additionally, USD 60.9 million was sold under the category of facilitating a limit of USD 500 per person via Bank of Maldives for Maldivians traveling abroad.
A total of USD 15.4 million was provided through banks to cater to other foreign currency requirements, including US dollar sales to Hajj and Umrah groups.
With US dollar sales have continued to increase annually for the past three years, the central bank has used the USD 400 million currency swap facility extended by the Reserve Bank of India (RBI) to manage the national reserve, with 50 percent of its US dollar reserve acquired through short-term financial instruments.
Despite the stronger tourist arrivals and improved dollar circulation in the Maldives, the current exchange rate of US dollar at street value has reached MVR 17.
Although the central bank had announced measures to curb the rise of exchange rates, it has not implemented such measures for the past two years.
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