Maldives takes USD 400 million currency swap to improve reserves

Maldives Monetary Authority (MMA) has taken out a USD 400 million currency swap from Reserve Bank of India (RBI) to improve Maldives' foreign currency reserves.

Earlier last month during President Dr Mohamed Muizzu's state visit to India, both countries exchanged documents for a USD 750 million currency swap. This includes a USD 400 million swap facility and a MVR 30 billion swap facility.

MMA said the official transactions took place on 22nd October.

Although the proceeds of the swap facility are usually invested in foreign banks, MMA said the USD 120 million proceeds were invested in local banks.

The decision was made because of higher returns from local investments, and to facilitate the stabilization and progress of the local financial environment, the central bank said.

With this facility, Maldives' reserve has increased to USD 615 million. This is a USD 244 million increase from the previous month. The official reserves were at USD 371 million in September.

However, the usable reserves have gone down by USD 17 million since last year, marking the lowest usable reserve amount in three years. In August, the usable reserves were at USD 45 million.

The fall in reserves are attributed to the need to use US Dollars to pay off foreign debt and other expenditures.