Maldives initiates talks with India and China for local currency payments

Maldives is in discussions with India and China to explore the possibility of making payments for imports in Maldivian Rufiyaa, announced Mohamed Saeed, the Minister for Economic Development and Trade to Maldives.

 

This initiative aims to diversify payment methods and potentially stabilize the Maldivian currency against the US dollar.

 

Speaking at an event on Maavah Island during President Mohamed Muizzu's visit to Laamu Atoll, Minister Saeed disclosed plans to negotiate similar arrangements with India and China, two of the Maldives' largest trading partners. The Maldives currently imports goods worth USD 780 million and USD 720 million annually from India and China respectively.

 

"The move, if materialized, would mark a significant departure from the conventional practice of conducting international transactions in US dollars",  Saeed said.

 

Minister Saeed emphasized the mutual benefits of such a shift, citing potential savings in foreign exchange reserves for both countries.

 

The announcement comes on the heels of India's decision in July 2023 to permit the Maldives, along with 21 other nations, to open Special Rupee Vostro Accounts (SRVAs). This measure was aimed at promoting bilateral trade in local currencies and facilitating payments for goods imported from India in Maldivian Rufiyaa.

 

Saeed expressed confidence in the potential strengthening of the Maldivian Rufiyaa against the dollar, projecting a 30 to 40 percent appreciation with a parliamentary majority. Such a surge, he suggested, could drive the dollar rate below MVR 15.42 in the future.