The Maldives Monetary Authority has opened investigations into money changers after finding that businesses earning large sums in foreign currency are moving dollars through the black market, Governor Ahmed Munnawar said.
Munnawar, speaking to reporters at the President’s Office, said black market activity had grown sharply over the past month. The conflict in the Middle East briefly disrupted the dollar market, he said, but did not justify a parallel market of the current size.
The central bank is now running monitoring operations aimed at money changers. Work carried out with enforcement agencies identified companies with substantial foreign currency earnings channeling those funds through unlicensed trade, Munnawar said. Regulators have suspended one money changer for breaching regulations, and the governor said authorities will investigate further and prosecute where the law allows.
The enforcement drive accompanies a broader package of Maldives foreign currency reforms. The government plans to propose amendments to the Foreign Currency Act that would raise the share of resort dollar revenue subject to mandatory exchange to 40 percent from 20 percent. The amendments would cut the window for converting those dollars to one month from three and create a mechanism to track how companies spend their dollar income.
Rufiyaa Transition Targeted for 2030
Munnawar said the central bank wants all financial transactional in the Maldives settled in Rufiyaa by 2030. Foreign currency accounts for more than 40 percent of transactions in the economy, he said, and much of the country’s commercial activity is still priced and settled in dollars. Previous governors set the same goal.
Salaries are one target. Munnawar cited Trans Maldivian Airways and resort operators as employers that pay staff in dollars, and said moving those payrolls to Rufiyaa would lift domestic demand for the currency. Tourism land rent, which the sector pays the state in foreign currency, is a second target.
The governor tied the Maldives foreign currency reforms to wider macroeconomic changes, including tighter budget policy. The central bank’s longer-term aim is a managed float of the Rufiyaa, an arrangement that would require the MMA to hold adequate reserves.
Tourism Recovers After Middle East Disruption
Economic indicators showed activity slowing in March and April as the Middle East conflict took hold, Munnawar said. The conflict hit the Maldives on two fronts, cutting tourist arrivals while raising costs for an economy that imports most of its goods and fuel.
Recent data point to a recovery in tourism. Arrivals fell overall, but tourism revenue rose 1 percent. Banking sector figures showed foreign currency income, deposits and credit each growing 18 percent.
Reserves remain under pressure. The conflicts in the Middle East and Ukraine pushed fuel prices to more than double earlier levels, lifting the import bill, Munnawar said. He said the MMA continues to work on rebuilding official reserves.
Pending Bill Reshapes Exchange Obligations
A separate amendment already before lawmakers would scrap the option allowing resorts to exchange USD 500 per tourist and require them instead to convert 20 percent of revenue.
That bill would ease exchange obligations for businesses wholly owned by Maldivians, excluding tourism operators and financial institutions, and addresses difficulties companies face in converting foreign currency within the amounts and deadlines the law sets.
Companies selling goods or services in the tourism sector would have to deposit foreign currency earnings into a bank account under the proposal. The same requirement would apply to other businesses that received at least USD 25 million in foreign currency during the previous calendar year, up from the USD 15 million threshold in the current law. The measures form part of the Maldives foreign currency reforms the government has pursued since tightening conversion rules on the tourism industry.