MMA Enters USD 400 Million Currency Swap with India

The Maldives Monetary Authority (MMA) has entered into a USD 400 million currency swap agreement with the Reserve Bank of India (RBI) as part of efforts to bolster the nation’s foreign currency reserves.

This agreement follows the exchange of documents during President Dr Mohamed Muizzu’s state visit to India last month, where both countries formalised a broader USD 750 million currency swap arrangement. This package includes the USD 400 million swap and an additional MVR 30 billion swap facility.

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The official transaction was completed on 22 October, according to the MMA. Typically, the proceeds from such swap agreements are placed in foreign banks, but in this instance, the MMA opted to invest USD 120 million of the funds in local banks. 

The central bank explained that this decision was driven by the higher returns offered by local investments and aimed at supporting the stability and development of the domestic financial environment.

With this currency swap, the Maldives’ foreign reserves have increased to USD 615 million, up USD 244 million from the previous month. The reserves stood at USD 371 million in September.

However, the country’s usable reserves have declined by USD 17 million compared to last year, marking the lowest usable reserve level in three years. As of August, usable reserves were at USD 45 million.

The drop in usable reserves has been attributed to the necessity of using foreign currency to meet foreign debt obligations and other national expenditures.