The Maldives is exploring new trade agreements with India and China that would allow the island nation to pay for imports in its local currency, the Maldivian Rufiyaa, rather than US dollars. This move signals a potential shift away from the dollar's dominance in global trade.
Discussions are underway with India to establish this payment system, and a similar arrangement is sought with China, stated Minister for Economic Development Mohamed Saeed. Annually, the Maldives imports approximately $780 million in goods from India and $720 million from China.
Saeed, speaking at a political event, linked the success of these trade deals to his party securing a majority in upcoming parliamentary elections. He asserted that this could strengthen the Maldivian Rufiyaa against the dollar and help stabilize currency exchange rates.
The minister explained that this approach conserves foreign exchange reserves for both the Maldives and its trading partners. In 2023, India authorized the Maldives to open Special Rupee Vostro Accounts to facilitate trade in local currencies.
Saeed emphasized that the Maldives values open trade relationships with diverse nations. Additionally, he revealed that the Maldives has invited the Governor of the Central Bank of China to discuss a potential currency swap agreement, which would allow imports from China to be paid in either Chinese Yuan or Maldivian Rufiyaa.
The Maldives' pursuit of these trade deals illustrates a growing trend toward using local currencies in international transactions. These efforts could reduce reliance on the US dollar and potentially lead to greater stability for the Maldivian economy.