The Maldives Monetary Authority (MMA) has withdrawn MVR 3 billion from the banking system through open market operations as part of efforts to reduce excess liquidity and support the value of the Rufiyaa.
The central bank resumed reverse repurchase operations on July 23 last year, following a more than 10-year suspension.
The move was aimed at reducing surplus money in the banking system, which has contributed to increased demand for foreign currency and placed pressure on the Rufiyaa exchange rate.
MMA data shows that surplus liquidity averaged around MVR 7 billion in June last year. By the end of June this year, it had fallen to approximately MVR 4 billion, representing a 39 percent reduction.
The authority has now approved further measures to tighten monetary policy and limit the amount of money circulating in the economy.
As part of the measures, the minimum reserve requirement for banks will be increased from 10.5 percent to 11 percent starting next month. The MMA will also expand its use of open market operations to further reduce excess liquidity.
The central bank said the measures are intended to ease pressure on the foreign exchange market and help maintain the stability of the Rufiyaa.
