Maldives Monetary Authority (MMA) has reduced the Minimum Reserve Requirement (MRR) for foreign currency deposits held by banks from 7.5 percent to 5 percent, effective today. The adjustment aims to ease liquidity constraints in the foreign exchange market and support broader economic activity.

This marks the first revision to the foreign currency MRR since October last year, when it was lowered from 10 percent to 7.5 percent. The MRR for deposits in Maldivian Rufiyaa remains unchanged at 10 percent.

The MRR is a monetary policy tool used by central banks to manage liquidity in the banking system. It requires commercial banks to hold a specific proportion of their local and foreign currency deposits with the central bank. These requirements are adjusted based on prevailing economic conditions.

According to the MMA, the latest reduction is intended to increase the availability of foreign currency in the financial system, enhance banks’ capacity to issue foreign currency loans, and stimulate economic growth. The move is expected to inject approximately USD 45 million in additional liquidity into the banking sector.

In addition to the MRR, the MMA uses other monetary tools such as open market operations and policy rate adjustments to regulate money supply and maintain price stability. The central bank stated that careful modifications to these instruments help support economic development while ensuring public confidence in the financial system.