The Bank of Maldives (BML) has blocked dollar transactions with Rufiyaa cards and reduced the limit of previously issued credit cards to USD 100.

"These changes are effective immediately and are in response to the escalating usage of foreign currency spend on cards and the static sale of foreign currency to the Bank," the national bank stated.

The changes announced are as follows:

• Existing debit cards: Suspension of allowance for foreign transactions for cards linked to MVR accounts.
• New debit and credit cards: Suspension of allowance for foreign transactions for cards linked to MVR accounts.
• Existing Standard and Gold credit cards: Monthly limit for foreign transactions reduced to USD 100.

"This year we have purchased approximately USD 60 million in foreign currency from our customers, but card usage is threefold higher than that. The card usage impacts our ability to provide foreign currency support to our business customers and we have this anomaly where the Bank provides 75 percent less foreign currency to the economic sector than we do for discretionary spend on cards dominated by travel and online shopping. We have to get the mix correct and ensure we are not squandering a scarce resource," said BML CEO and Managing Director Karl Stumke.

He stated that the bank has an obligation to protect its depositors and cannot continue to sell more than it was able to purchase.

"We understand that the changes announced today will have a significant impact on our customers. We do expect this to be a temporary change and we will review this from time to time and keep our customers informed of any changes. We have not taken this decision lightly but have been compelled to take action to ensure we can continue to provide the necessary support for essential economic activities."

According to BML, customers using their USD credit cards and or debit cards linked to USD accounts are unaffected and are free to use up to the available account balance.

The bank recommended customers that have recurring international payments to have USD accounts as their debit cards’ primary account to process overseas purchases.

The dollar is currently at MVR 18.40 on the black market amid the country's financial crisis. Stumke has previously said that "difficult decisions" could be made as the amount of dollars available to buy is less than the amount sold.