Dollar rate rises sharply as BML changes card limits

The US dollar rate in the black market rose sharply on Sunday, reacting to the decision by the Bank of Maldives (BML) to either suspend or drop the monthly limit for foreign transactions for bank cards.

The US dollar rate in the Maldivian black market is currently between MVR 18.50 and MVR 18.85, and is expected to rise further.

BML announced the changes to its card limit for foreign transactions in a statement on Sunday.

“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,” said BML.

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.

BML said that it decided to make the changes because the card usage is threefold higher than foreign currency it is able to purchase – impacting the bank’s ability to provide foreign currency support to its business customers.

BML’s CEO and Managing Director Karl Stumke acknowledged that the changes will have a significant impact on the bank’s customers, but said the bank accepts the changes to be temporary.

“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,” he said.

“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.”

BML had previously allowed up to USD 250 in foreign transactions from its debit and credit cards, and up to USD 750 for Maldivians residing overseas.

The bank had imposed the limit of foreign transactions following a shortage in USD amid the economic downturn during the Covid-19 pandemic. The failure to raise the limit in the four years since had sparked criticism against the bank.

President Dr. Mohamed Muizzu, during his 2023 presidential campaign, pledged to lift the limit.

In January, President Muizzu’s administration announced that the limit would be raised from USD 750 to USD 1,200 for Maldivian students overseas. But the February deadline passed without implementing the promised change.

The BML’s decision to change its card limits for foreign transactions comes after the Privatization and Corporatization Board (PCB) sent a letter to the bank’s Deputy CEO Aishath Nooraddin – who had served at the bank for over 42 years – informing her of the decision to dismiss her from the bank’s board.

However, the dismissal of board members requires approval from the bank’s shareholders.

The BML’s board also underwent changes in January. All non-executive members of the board were dismissed, but two of them were later reappointed.