Former President Mohamed Nasheed has said that allowing the US dollar exchange rate to be determined entirely by market forces would be the most effective way to resolve the Maldives’ ongoing foreign currency challenges.

In a post shared on X on Wednesday, Nasheed commented on the current market value of the dollar, noting that merely devaluing the Maldivian Rufiyaa would not address the root of the issue.

He stated that even if the official exchange rate were adjusted to MVR 20 per dollar, a parallel market would continue to operate as long as banks are unable to supply sufficient dollars at the official rate.

Nasheed stressed that the most viable solution is to fully float the exchange rate, allowing the true value of the dollar to be determined naturally through supply and demand.

The most recent major adjustment to the exchange rate occurred during Nasheed’s administration in early April 2011.

At the time, the official rate of MVR 12.80 per dollar was permitted to fluctuate within a managed band between MVR 10.28 and MVR 15.42.

Since then, the dollar rate has risen to MVR 18, while foreign currency shortages have persisted.

In response, authorities introduced a series of regulatory measures last year aimed at strengthening oversight of foreign exchange transactions.

To address the ongoing shortage, the Maldives Monetary Authority (MMA) enacted amendments to the Foreign Exchange Act, requiring businesses that generate income in foreign currency to deposit their earnings in local banks and convert a designated portion through the formal banking system.

The central bank has reported improvements in dollar availability since the amendments came into force.

Reflecting these developments, the Bank of Maldives (BML) has expanded its foreign transaction limits. The monthly limit for overseas Point of Sale (POS) transactions using Maldivian Rufiyaa debit cards has been increased to USD 1,000, while the limit for travel and medical expenses has been raised to USD 3,000 per month.

In addition, BML revised its credit card limits in January.

The monthly foreign transaction limit for ‘Classic’ credit cards was increased from USD 750 to USD 1,400, while ‘Gold’ card limits rose from USD 750 to USD 1,500.

The limit for ‘Platinum’ cards was raised from USD 1,500 to USD 3,000.