The exchange rate for the US dollar on the black market has surged to a record high, with the rate now reaching MVR 20.50 per dollar.
This marks the first time since the COVID-19 pandemic that the dollar rate has hit the MVR 20.50 mark. The spike follows a prolonged period where the rate remained consistently above MVR 20, representing the longest duration the currency has stayed at such a high value.
Speaking to Adhadhu, a licensed money changer said that while the rate briefly reached this level during the pandemic, the main reason behind the current record surge is the government's mandatory dollar conversion policy.
He further noted that the supply of dollars has tightened due to a decline in tourist arrivals and the fact that employees who previously earned in dollars are no longer receiving their wages in foreign currency. Additionally, reduced dollar support from banks to businesses has caused market demand to skyrocket.
"We expect that any potential improvement or change in the dollar rate will likely only occur by August," a trader remarked.
The Managing Director of a major local construction firm confirmed that their company had to purchase dollars at MVR 20.50 yesterday. This stands in contrast to the official exchange rate, which remains at MVR 15.42.
"We do not anticipate the price dropping in the near future. As travel to the Middle East becomes easier, imports are expected to increase. This will drive up the demand for dollars and the price," he said.
Despite President Mohamed Muizzu’s earlier assurances that the implementation of the new foreign currency exchange regulations would prevent the dollar rate from rising, the market rate has consistently remained above MVR 20.00 since the policy took effect.
