Economic Minister Mohamed Saeed has alleged that several businesses reaping massive profits from the dollar black market have been utilizing those gains to fund their entire employee payrolls.
Speaking at a press conference yesterday regarding ongoing operations to curb the black market, Saeed—without naming specific entities—stated that certain groups have been making a profit of four to five Rufiyaa per dollar. He noted that the current crackdown is successfully identifying those involved in these illicit activities.
Reiterating previous concerns, the Minister noted that these businesses have been setting their own arbitrary exchange rates to sell dollars. He explained that this practice is driven by the financial gains it generates, which are then diverted into various other expenditures.
"The profit from that exchange rate difference is being reinvested into other ventures. We have seen cases where businesses that started small are now managing their entire payroll through black market profits. I am talking about large companies here," Saeed said.
Saeed also linked the practice of reinvesting black market profits to the rising cost of living, asserting that market prices are inflating because the value of the dollar is being "artificially manipulated."
The Minister emphasized that the businesses involved are well aware that maintaining prices detached from "market reality" is unsustainable. He added that the government was forced to seek "artificial" solutions only because prices were being "artificially" dictated by these actors.
"Policymakers, market participants, investors, and businesses must all accept one reality: driving up rates through market manipulation will not last. It is neither feasible nor sustainable in the long run," Saeed said.
The Governor of the Maldives Monetary Authority (MMA), Ahmed Munawar, has previously highlighted that dollar rates are being set inconsistently with market fundamentals, pointing to "speculative" pricing. Munawar noted that, given the current inflow of foreign currency, there is no justifiable reason for the dollar rate to be as high as it currently stands.
Despite these assertions from the government and the central bank, some economic experts and opposition parties argue that the dollar shortage and price hikes are the result of the government’s failure to reduce spending.
They point to wasteful projects that drain foreign reserves and argue that the situation has worsened because the government is sourcing dollars from the domestic market to meet looming external debt obligations instead of securing foreign financing.
