The Maldives has initiated discussions with India concerning the potential for settling Indian import payments using the Maldivian Rufiyaa, declared Mohamed Saeed, Minister for Economic Development. This announcement surfaced at a public gathering on the island of Maavah, Laamu Atoll, highlighting the government’s strategic economic priorities just before the parliamentary elections scheduled for April 21.
As a significant importer, with annual expenditures of roughly $780 million on Indian goods, the Maldives’ endeavor to pivot from the prevalent US dollar in these transactions underscores a significant move towards economic self-reliance and lessening foreign currency reserve dependencies.
Following the Indian government’s July 2023 authorization for 22 countries, including the Maldives, to establish Special Rupee Vostro Accounts (SRVAs), these discussions gained momentum. This policy by the Reserve Bank of India promotes bilateral trade through local currencies, thereby enabling the Maldives to conduct transactions in Rufiyaa.
Minister Saeed articulated optimism regarding these negotiations, indicating that achieving a majority in parliament would facilitate government efforts to realign the dollar exchange rate to official market values within a two-year span. He projected a potential 30 to 40 percent appreciation of the Maldivian Rufiyaa against the dollar, predicting a subsequent decline in the dollar rate to below MVR 15.42.
Parallel negotiations are underway with China, from which the Maldives imports goods worth $720 million annually. These discussions aim to establish a currency swap agreement, permitting payments for at least half of these imports in either Yuan or Maldivian Rufiyaa. This initiative was highlighted by the recent invitation to the Governor of the Central Bank of China to visit the Maldives.
These initiatives reflect the Maldives’ broader strategy to diversify economic alliances and diminish reliance on the US dollar, thereby potentially enhancing financial autonomy and stability. Minister Saeed reinforced the nation’s commitment to robust international trade relations, emphasizing that the Maldives does not intend to sever ties with any country. This approach represents a calculated maneuver to navigate complex geopolitical landscapes while safeguarding national economic interests.
LATEST NEWS | India Renews Maldives Export Deal, Boosting Ties with Essential Commodities
