The Maldives' official reserve assets reached USD 810.05 million at the end of August, marking a 4.5 percent increase compared to July, according to data released by the Maldives Monetary Authority (MMA).
This positive trend in official reserves reflects various government efforts to strengthen the nation's foreign currency holdings.
As of August, official reserves reached USD 810.05 million, marking a healthy 4.5 percent month-on-month increase from July's USD 774.5 million. This headline growth was further complemented by USD 117.22 million in securities investments and other foreign currency assets not formally included in official reserves, bringing the total foreign currency holdings higher.
However, this positive trend in gross reserves is overshadowed by a significant rise in the nation's short-term foreign exchange obligations. These payables surged to USD 738.63 million in August, up from USD 688.24 million in the preceding month.
This increase in immediate liabilities has directly impacted the nation's usable reserves – a critical metric that reflects the foreign exchange available for immediate deployment by deducting short-term obligations from official reserves and other foreign currency assets.
Consequently, usable reserves plunged by 11.5 percent month-on-month, standing at USD 188.64 million in August, a notable decrease from July's USD 213.22 million.
The MMA has been implementing several strategies to enhance reserves, including utilising 60 percent of the dollars received by banks to bolster reserves under the new foreign exchange law.
Foreign exchange earnings from tourism have also increased this year, contributing to the positive change in official reserves. The USD 400 million currency swap signed with the Reserve Bank of India (RBI) under the SAARC framework has also played a crucial role in alleviating foreign currency shortages and supporting the country's liquidity needs.
The government is actively working to bring about a positive change in the official reserves as the MMA is expected to pay more than USD 1 billion next year.