MMA Raises Mandatory USD Exchange Requirement from 60% to 90%

The Maldives Monetary Authority (MMA) has announced a significant policy shift by increasing the proportion of US dollars that banks are required to sell to the central bank. This change affects the USD proceeds banks collect from tourist establishments under the Foreign Currency Act.

The adjustment, communicated to banks through a circular on Monday, will take effect in June and raises the current sale requirement from 60 percent to 90 percent. While the updated regulation introduced in February 2025 does not specify a percentage, sources indicate the MMA had continued to enforce the 60 percent threshold until now. Several banks have confirmed receipt of the new directive, though the MMA has not issued an official statement on the change.

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The revised directive is part of a broader foreign exchange policy overhaul initiated in late 2024. In October of that year, the MMA introduced a regulation mandating that tourist establishments exchange a fixed amount of US dollars per tourist in local banks. Resorts were required to exchange USD 500 per tourist, while guesthouses were obligated to exchange USD 25.

This fixed-rate requirement was met with resistance from major stakeholders in the tourism industry. Critics argued the measure did not account for differences in market segments, room rates, length of stay, guest demographics or promotional offers. Concerns were also raised over the operational need to retain US dollars for expenses incurred in foreign currency.

In response to industry concerns, the MMA submitted a foreign exchange bill to Parliament in December 2024. The legislation offered establishments a choice between exchanging the fixed amount per tourist or 20 percent of their monthly revenue. The bill was swiftly passed, ratified, and came into force on 1 January 2025, effectively replacing the initial October regulation.

Under the Foreign Currency Act, which also came into force on 1 January, tourist establishments are divided into two categories. Category-A includes registered resorts, integrated tourist resorts and private islands, which must either exchange USD 500 per tourist or 20 percent of monthly revenue. Category-B encompasses registered tourist vessels, tourist hotels and guesthouses, which must exchange USD 25 per tourist or the same revenue percentage.

Exemptions apply for tourists under the age of 12, those staying less than 24 hours, guests hosted on a complimentary basis by establishments, and those hosted by the government. The Act also provides limited flexibility for establishments facing financial constraints, allowing for reduced exchange obligations upon approval by the MMA on a case-by-case basis.

Additionally, the law requires non-tourism businesses generating more than USD 15 million in annual foreign currency revenue to exchange a portion of their monthly income. These policy changes are aimed at addressing a foreign currency shortage and increasing the availability of US dollars within the Maldivian banking system.