~' Dhivehi Vindhu `~ For the People ~ From the Pleople

Minivan News Gonne Crazy.
President Mr. Mohamed Nasheed has not spoken about the Dollar crises yesterday at the Press Conference. He spoke about the Dollar crises while answering Miadhu Daily’s question about the shortage of Dollars.

Anyway the fact is Maldives is facing severe Dollar shortage. Main reason to be believed is that government has used additional currency Rufiyaa to pay the government bills and expenses since the funds were empty when Dictator Gayyoom left the post of President after 30 years. No body knows where all the money gone. It is simply missing. Government treasury is simply empty.

Black Market Dollars Flood Market
18 December 2008
Zaheena Rasheed

President Mohamed Nasheed has said the dollar shortage in the Maldives and the resulting black market trade in dollars will be solved as soon as possible.

Speaking at a press conference on Wednesday, the president said he was aware the public were finding it difficult to obtain foreign currency from banks but that the problem would be resolved shortly.

Presidential spokesperson Mohamed Zuahir has said incoming aid from countries such as India, China and Europe would help to alleviate the shortage.

“The president is travelling abroad quite soon to formalise the pledges of many countries made to this government,” he said.

But, a leading economist, who does not wish to be named, has said the black market trade in dollars, where a dollar can be purchased at the rate of Rf13.50, means the Maldives is “heading for trouble”.

“I think it’s getting more serious everyday and in a week we will be in real trouble if it continues to rise like this,” said.

The explanation offered by banks, he added, is that this year, the Hajj season had coincided with the school holidays, resulting in a large number of people leaving the country with cash in dollars to spend abroad.

“The number of dollars coming into the country is not sufficient to meet demand,” he said. “And tourists coming into the country are not spending as much money on souvenirs as they used to because of the global recession.”

Although some analysts have said the oncoming tourism season will bring with it an influx of dollars into the country, others remain sceptical as to whether this will make a dramatic difference.

The Maldives is currently facing an economic crisis with only US$116 million remaining as state foreign reserves and government debt standing at US$609 million, according to the auditor general.

The present exchange rate, set by the Maldives Monetary Authority, is Rf12.75 for every dollar. The Maldivian rufiyaa is pegged to the dollar which means the exchange rate is arbitrarily set and maintained by the government.

In order to maintain the rate, the bank must buy and sell its own currency on the foreign exchange market in return for the currency to which it is pegged.

The central bank keeps a high level of foreign reserves so that it can release or absorb funds in order to maintain the exchange rate.