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US Dollar rate falling in the Maldivian black market

Lamya Abdulla
11 August 2021, MVT 13:27
(FILE) Dollars being withdrawn in the BML Dollar ATM : the fall in Dollar rate in the black market has been accredited to an increase in tourist arrivals in Maldives -- Photo: Nishan Ali/ Mihaaru
Lamya Abdulla
11 August 2021, MVT 13:27

Due to an increase in the supply of US Dollars within the Maldivian market, its exchange rate has fallen from MVR 18.80 per US Dollar to MVR 17.40 per US Dollar within a week.

When the tourism industry was halted last year due to the pandemic, a black market appeared to meet the demand. US Dollars have been exchanged at a steady rate of MVR 18-19 per Dollar since the beginning of the year in the black market. However the exchange rate had fallen to MVR 17.40-17.60 since Saturday.

A trader predicts the exchange rate will fall to 17 Rufiyaa by the time the week is over. He says this is due to an increase in tourist arrival coupled with a decrease in how frequently businesses use US Dollars now.

"Most places business owners go are now closed. Previously, they would gather around USD 30,000 to go to places like Thailand or Malaysia. They don't exchange that much anymore," he said.

The tourist arrivals in Maldives have increased this month. On average over 4,000 tourists arrive in Maldives every day, with over 6,000 tourists visiting on Saturday. This is the most amount of tourists that had arrived in a single day this month so far.

Even though the exchange rate for US Dollars had been maintained at MVR 15.42 per Dollar by the authorities, the lack of availability drove the business into the hands of wealthy business owners, who had a near monopoly on the market. One of the highest rates US Dollars were exchanged last year was at MVR 20 per Dollar.

Maldives Monetary Authority (MMA) had said they were working to control the Dollar exchange market. They have not yet disclosed what steps they have taken to ensure this is being done.

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