Tag: exchange rate

Tourist arrivals increase 16 percent in April

Tourist arrivals in April increased 16 percent in annual terms, reaching 105,309 guests during the month, but declined marginally compared to March, according to the Maldives Monetary Authority’s (MMA) latest monthly economic review.

A total of 105,560 tourist arrivals were recorded during the previous month.

“The annual increase in arrival was contributed by the increase in the number of arrivals from Asia and Europe,” the review stated.

“In April 2014, total bednights rose by nine percent in annual terms while the average duration of stay declined by six percent. As for the occupancy rate, it increased to 80 percent in April 2014 from 75 percent in April 2013, as the impact of the increase in bednights was greater than the increase in operational bed capacity of the industry during the review month.”

The central bank had explained in its monthly review for March that the annual increase in tourist arrivals was due to the rise in the number of Chinese tourists, “which offset the decline in arrivals from Europe.”

According to statistics from the Tourism Ministry for the first quarter of 2014, Europe retained the largest market share despite the continuing growth of the Chinese market, accounting for of 51.3 percent of all arrivals to the Maldives.

Asia and the Pacific recorded a growth rate of 24.4 percent at the end of first quarter, bringing in an additional 26,606 tourists to reach a total of 135,839.

The region accounted for 42.2 percent of arrivals to the Maldives at the end of first quarter of 2014.

The Chinese market also expanded by 24 percent with an additional 16,960 tourists compared with the same period of 2013.

A total of 331,719 Chinese tourists visited the Maldives last year, which was a 44.5 percent increase from the previous year.

Chinese tourists accounted for 29.5 percent of all tourist arrivals in 2013.

The Maldivian economy is largely dependent on tourism, which accounted for 28 percent of GDP on average in the past five years, and generated 38 percent of government revenue in 2012.

Real GDP growth is meanwhile expected to accelerate to 4.5 percent in 2014, “driven mainly by the tourism sector” while “economic activity is also expected to be spurred by the government budgeted expenditure of MVR16.4 billion.”

Inflation

The rate of inflation in the capital Malé – measured by the annual percentage change in the Consumer Price Index (CPI) – reached 2.6 percent in April, up from 2.3 percent the previous month.

The inflation rate in February 2014 was 3.4 percent.

“This was largely contributed by the pick up in the growth of food prices, especially fish, and also due to the moderate growth in rent prices and cost of health services,” the review explained.

“On monthly terms, the rate of inflation increased from -0.5 percent in March 2014 to 0.3 percent in April 2014, which was mainly due to the growth in fish prices.”

The International Monetary Fund (IMF) commodity price index meanwhile registered an increase of one percent in monthly terms and three percent in annual terms in April.

“The monthly increase was mainly due to the increase in prices of petroleum, food and metal prices. As for the annual increase, it was due to the increase in food and petroleum prices as metal prices fell during the review period.”

“The price of crude oil increased by one percent in monthly terms and by six percent in annual terms to US$104.9 per barrel at the end of April 2014,” the review stated.

Gross international reserves meanwhile grew by 24 percent in April compared to the same period last year, reaching US$434.8 million by the end of the month. The gross reserves however declined by 13 percent in April in monthly terms.

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Foreign investment key to address dollar supply issues: economic development minister

Economic Development Minister Ahmed Mohamed has claimed in local media that the value of the US Dollar against the Maldivian Rufiyaa is not expected to fall in the “near future”, citing the need for a new long-term financial strategy.

Criticising the previous government’s decision to amend local dollar exchange rates – capped at Rf12.85 until April last year –  in an attempt to alleviate black market trading of foreign currency, Ahmed claimed a new approach to foreign investment was needed to alleviate the supply situation.

“After Ramadan, we will announce several new projects. This would be a solution to the dollar problem,” he told local news service Sun Online yesterday.

Ahmed also hit out at the previous government’s decision to discontinue charging import duty to instead impose a General Goods and Services Tax (G-GST). The tax, which was passed by parliament last year rose to six percent from 3.5 percent yesterday while import duties were lowered or eliminated for a range of commodities starting January 1, 2012.

The Tourism Goods and Services Tax (T-GST) was meanwhile raised to six percent for 2012 as stipulated in the GST Act.

Despite Ahmed’s criticisms, two former economic ministers serving within the administration of former President Mohamed Nasheed claimed last month that they were confused by the seemingly contradictory measures of increasing import duties whilst reducing GST.

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Rise in blackmarket exchange rate no setback for currency stability aims, claims Economic Development Minister

Two months after the government announced plans for greater economic stability by devaluing its currency against the US dollar, the Maldives’ Economic Development Minister has said increases in black market exchange rates are no setback to the country’s long-term financial aims.

Amidst local media reports that the value of the Maldivian rufiyaa – capped until April this year at Rf12.85 against the US dollar – was trading at Rf16.5 on the black market, Minister Mahmood Razee said that authorities would likely wait for an allotted three month-period to pass before considering any additional financial support measures.

Despite this approach, the Maldives National Chamber of Commerce and Industry (MNCCI) has claimed that local enterprise is not being supported by financial institutions like banks in terms its needs – particularly for importers reliant on foreign currency to bring in goods to the market.

However, sticking to earlier estimates that the managed float of the rufiyaa within 20 percent of the 12.85 exchange would require about three months to begin to bring stability, Razee claimed that it remained too early to say if additional support measures were needed from the government to bridge the dollar supply.

“I don’t see the black-market exchange rate as a setback as it is low [tourism] season right now, meaning we are earning fewer dollars,” he said. “Now it has been a couple of months since we changed the dollar rate. When [the currency float] was announced in April we said it will take around three months to see if the rate will stabilize. We do not know yet whether there is just a dip in [dollar] supply or something else.”

When addressing potential changes already bought about to the exchange rate since the dollar float was introduced, Razee said he believed it remained too early to speculate on what longer term impacts had taken place in regards to the availability of dollars.

The Economic Development Minister added that if there were no signs of stabilisation by next month, then he expected the Ministry of Finance to begin looking at additional measures to try and bring some market stability to the economy.

“I’m not privy to the exact information on what these measures could be right now,” he said. “What we have been doing is working with national authorities in markets like India to see what means of assistance there might be.”

The rufiyaa has sat at the maximum limit of Rf15.42 following the government’s managed float of the rufiyaa within a 20 percent band.

Treasurer of the Maldives National Chamber of Commerce and Industry (MNCCI), Ahmed Adheeb Abdul Gafoor, told Minivan News that he believed that the managed currency float had served only to exacerbate the difficulties facing local businesses that were being given little choice other than to rely on black market exchange rates.

“The banks are not providing dollars to businesses, especially for importer and traders who are the backbone of the economy and vital to distributing goods,” he claimed. “With Ramazan ahead, we have been told that the State Trading Organisation (STO) will be providing 27 goods and commodities at stable prices, but we will have to see if this is possible.”

Adheeb claimed that in the immediate term, banks had simply not been providing additional credit lines for businesses requiring foreign currency exchanges, a demand he said that was having to be satisfied through additional financial channels.

“The solution I believe is that banks will have to provide,” he said. “Credit card payments are being settled in rifuyaa, yet many importers are not being satisfied when it comes to their own needs.”

Speaking as a private citizen Adheeb said that more changes were needed in how banks dealt with business as well as how government were looking to encourage sustainable foreign finance.

“We have seen no encouraging signs [from the float] and I don’t think this is a good policy at this time,” he said.

The MNCCI treasurer said that he believed that alongside government talk of minimum wages, it would be wise to discuss maximum wages in certain cases to try and balance national; budget more effectively.

“I don’t understand why this is a policy not being discussed,” he added.

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