Maldives is actively considering the option of settling payments for its imports from India in Maldivian Rufiyaa, as announced by a senior minister. Minister for Economic Development Mohamed Saeed disclosed ongoing discussions regarding this prospect. Annually, Maldives imports goods totalling USD 780 million from India and USD 720 million from China.
Addressing an event during President Mohamed Muizzu’s visit to Laamu Atoll ahead of parliamentary elections on April 21, Saeed expressed optimism regarding this potential transition. He noted that should the ruling party secure a parliamentary majority, efforts would be made to stabilize the dollar rate to official market values within an estimated two-year timeframe.
Saeed highlighted the advantages of conducting international trade in local currencies, emphasizing its role in safeguarding foreign exchange reserves. This initiative represents a significant departure from the prevailing reliance on the US dollar in global transactions.
The decision aligns with the Government of India’s announcement in July 2023, granting permission to the Maldives and 21 other countries to establish Special Rupee Vostro Accounts (SRVAs) to facilitate bilateral trade in local currencies. Saeed underscored Maldives’ dedication to trade partnerships and reaffirmed the country’s commitment to international trade.
In terms of potential currency exchange rate implications, Saeed mentioned forecasts indicating a projected 30 to 40 per cent strengthening of the Maldivian Rufiyaa against the dollar with a parliamentary majority. This is anticipated to result in a subsequent decrease in the dollar rate, with the aim of falling below MVR 15.42 in the foreseeable future.
Additionally, Saeed disclosed Maldives’ invitation to the Governor of the Central Bank of China to visit the country. Efforts are currently underway to finalize a currency swap agreement between the two nations.
