The Maldives Monetary Authority (MMA) temporarily halted the issuance of licenses for exchanging foreign currency.
According to the central bank, the decision was finalised as there were already a significant number of license holders considering the population of Maldives.
MMA further revealed that efforts were underway to amend current regulations regarding the issuance of foreign currency exchange licenses.
The ongoing COVID-19 pandemic resulted in widespread shortages of foreign currency available to businesses, following the halt in tourism and subsequent disruption of foreign currency inflow.
Despite the government's decision to reopen borders from July 15 onwards, tourist arrivals remain below pre-COVID figures, and pressures on the local foreign currency market persist.
Although dollar exchanges for rates above the standard rate of MVR 15.42 per dollar as specified by Maldives Monetary Authority (MMA) are illegal, traders and other buyers in Maldives often opt to buy US dollars from the black market due to lack of sufficient dollar availability at banks.
In September, MMA had revealed that it would only issue US dollars to banks for necessities such as import of food and beverages and medical supplies.
On October 5, the central bank increased the allocation of US Dollars issued to banks operating in the country in order to reduce pressures on the local foreign currency market.
Following nearly four months, the Maldivian government reopened borders to international passengers on July 15.
As with numerous countries around the world, in the wake of the ongoing COVID-19 pandemic, Maldives closed its air and sea borders to tourist arrivals on March 27, halting the issuance of on-arrival visas until July 15.
The restrictions on international travel left Maldives' heavily tourism reliant economy in an extremely vulnerable state. In mid-April, the World Bank projected that Maldives would be the worst-hit economy in the South Asian region due to the pandemic.
The central bank earlier revealed that Maldives' usable reserve had depleted to USD 152.6 million by June. The reduction represents a 49 percent depletion compared to January's value of USD 311.3 million.
Overall, the Maldivian government estimates a shortfall of approximately USD 450 million (MVR 6.9 billion) in foreign currency and a state deficit of MVR 13 billion in 2020 as a result of the COVID-19 pandemic's impact on the tourism industry.