Opposition protests over managed float of currency end peacefully

Rival factions of the Dhivehi Rayyithunge Party (DRP) yesterday held separate protests against the government’s decision to allow the rufiya to be traded at rates of up to Rf15.42.

The faction led by former President Maumoon Abdul Gayoom last night marched from the tsunami monument and down Ameenee Magu, a main street of Male’, together with the party’s former Deputy Leader Umar Naseer and MPs Ahmed Nihan, Ahmed Mahlouf, Ahmed Ilham and Gayoom’s spokesperson Ahmed ‘Mundhu’ Shareef.

Meanwhile, a much smaller protest led by DRP Deputy Leader Ali Waheed and several senior officials of the Dhivehi Qaumee Party (DQP) made its way down the main street of Majeedee Magu. DRP Leader Ahmed Thasmeen Ali was absent from the march.

Gayoom’s faction marched towards Muleeage’, the official residence of the President, with the intention of handing him a letter from the DRP. However they were obstructed by lines of police blocking streets in some places standing shoulder-to-shoulder. Instead, the marchers headed to police headquarters, where the police were given the letter to hand over to the President.

Both marches ended peacefully, aside from minor confrontations between police and DRP protesters on the route to Muleaage’.

Following a crackdown on the blackmarket trading of dollars at rates higher than the pegged rate of Rf12.85, which was hovering around 14.2, the government on Sunday declared a ‘managed float’ of the currency within a 20 percent band.

Many companies dealing in dollar commodities immediately raised their exchange rates to Rf 15.42, along with the Bank of Maldives. The Bank of Ceylon was selling dollars at 14.5 yesterday, while Habib bank was selling at 13.75. HSBC was selling at 15.4.

The International Monetary Fund (IMF), which has been critical of the government’s growing expenditure despite a large budget deficit, praised Sunday’s decision as a step towards a mature and sustainable economy.

“Today’s bold step by the authorities represents an important move toward restoring external sustainability,” the IMF said in a statement. “IMF staff support this decision made by the authorities. We remain in close contact and are ready to offer any technical assistance that they may request.”

The government’s move, while broadly unpopular, acknowledges the devaluation of the rufiya in the wake of increased expenditure and its inability to overcome the political obstacles inherent in reducing spending on the country’s bloated civil service.

However the Maldives relies almost entirely on imported goods and fuel, and many ordinary citizens will be harshly affected by short-term spike in prices of up to 20 percent as the rufiya settles.

“We do not really know, based on the breadth of the domestic economy, what the value of the Maldivian rufiyaa is right now,” Economic Development Minister Mahmoud Razee admitted at a press conference on Monday.

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