The primary job of the Maldives Monetary Authority (MMA, the central bank) is to maintain price stability, although legislation also tasks it with preserving an adequate level of international reserves. The MMA achieves monetary stability in part through the peg between the currency (the rufiyaa) and the US dollar. In view of this peg, the MMA has little scope to conduct independent monetary policy.

The MMA uses minimum reserve requirements (MRRs) for banks and open-market operations as instruments to control local credit creation and money supply. We expect the MRR on foreign-currency deposits to be raised back to 10% during the remainder of 2022, from 5% currently, as steady tourism earnings reduce the risk of dollar illiquidity in the local currency market. The increase is likely to be delivered in two increments of 2.5 percentage points each over the year, matching the rise of MRR on local-currency deposits to 10% in 2021.