Maldives Central Bank Tightens Liquidity to Curb MVR Surplus and Ease Dollar Strain

The Maldives Monetary Authority (MMA) has announced that it will raise the Minimum Reserve Requirement (MRR) for Maldivian rufiyaa (MVR) deposits from 10.5 percent to 11 percent effective next month, a move aimed at draining excess liquidity from the banking system. 

The decision, taken by the MMA’s board, also includes a modest tightening of open‑market operations (OMO) by 10 basis points (0.10 percent).

According to the central bank, the higher MRR will compel commercial banks to set aside a larger share of customer deposits at the MMA, leaving less available for lending and other activities.

The MMA said the MRR will be reviewed every three months throughout 2027, with a policy goal of lifting the requirement to 13 percent by year‑end should inflationary pressures persist.

In tandem with the reserve hike, the MMA will intensify its OMO programme. The MMAreported that, by the end of July last year, reverse repurchase operations had already absorbed an average of MVR 2.7 billion, trimming short‑term liquidity from MVR 6.5 billion to 3.7 billion.

The updated OMO stance is intended to push the total amount of money circulating in the economy toward the MMA’s target band of MVR 2-3 billion.

The MMA highlighted that the government’s long‑term debt to the central bank stands at MVR 14 billion, representing funds that have been printed over successive fiscal periods.

Meanwhile, to alleviate a chronic dollar shortage, the MMA had previously cut the foreign‑currency MRR from 7.5 percent to 5 percent in July 2025.

Despite that easing, the black‑market exchange rate remains stubbornly above MVR 21 per US dollar, and the state’s foreign reserves have been repeatedly tapped to meet external obligations—most notably earlier this year when a portion of the reserves was used to repay a USD 500 million government sukuk.