The central bank, Maldives Monetary Authority (MMA) has announced a ten percent increase in the allocation of US dollars to local banks for commercial purposes, including Telegraphic Transfers (TTs) and Letters of Credit (LC).
The central bank decided to introduce the change effective from this week, allowing banks to increase their current dollar sales to small and medium enterprises by 40 percent.
In June this year, MMA increased the requirement for local banks to sell US dollars to the central bank from 60 percent to 90 percent. Of this, 30 percent is returned to the banks through weekly foreign exchange sales. MMA said the main objective of the change is to meet the foreign exchange needs of businesses in a more reliable and equitable manner.
The MMA channels 30 percent of the returned funds for certain purposes, such as on various essential needs of the public and food imports. A significant percentage is also allocated to provide foreign exchange assistance to small and medium enterprises.
With the amendment to the Foreign Exchange Act, the percentage of dollars sold through banks to small and medium enterprises currently stands at 30 percent, according to MMA statistics. However, the central bank aims to increase SME access to 50 percent in the near future.