Maldives Monetary Authority (MMA) sold more US dollars in July than it received during the month, as weaker tourism-season inflows and increased demand placed additional pressure on the country's foreign exchange market.

Under the Foreign Currency Act, foreign currency generated by tourism-related activities must be converted through banks at a prescribed rate based on tourist arrivals.

Banks are then required to transfer 90 percent of the converted amount to the MMA, which sells part of the foreign currency back to banks while retaining the remainder to support national reserves.

The central bank said demand for dollars for overseas travel, medical treatment and Umrah trips increased by 172 percent in July compared with June.

The rise was partly attributed to school holidays, while July's tourism off-season reduced foreign currency inflows.

To improve dollar availability, the MMA has increased the amount of foreign currency supplied to commercial banks by 51 percent for three weeks starting this week.

The measure is intended to help businesses obtain dollars for imports through telegraphic transfers and letters of credit.

Official reserve data show that the Maldives' foreign currency reserves declined from USD 686.8 million at the end of June to USD 638 million by the end of July, a drop of about 7 percent.

Meanwhile, Parliament is considering amendments to the Foreign Currency Act aimed at easing conversion requirements for businesses.

One proposed change would remove the current USD 500-per-tourist conversion option for resorts.

Under the existing system, resorts that do not meet the per-tourist conversion requirement must instead convert 20 percent of their income.

The MMA has said this arrangement can create difficulties for resorts with different operating models.