Invest a dollar, lose a dollar? What BML's new scheme really does

On social media and in comment sections, the scheme drew a wall of derision as critics questioned the legality of the exchange. The bank's own worked example circulated online with the arithmetic run in reverse: the "return" is not a yield at all but the price the bank is now willing to pay for a dollar.

The move comes after the black market rate hit MVR 20.50, well above the MVR 15.42 peg and the worst since the pandemic. Last month, the bank set an unannounced "daily foreign spend budget" – applied per website with no published limit and no stated reset time – and limited e-commerce transactions.

Here is what the new investment scheme does and why it has provoked the reaction it has.

At a "Chat with the CEO" event at Hotel Jen on Tuesday morning, Chief Executive Officer Mohamed Shareef unveiled "Investments by BML," accessible through a portal on the bank's app and internet banking. A customer invests US dollars into one of several daily "investment pools" offering different rates. The Rufiyaa equivalent is credited to their account instantly at the pegged rate of MVR 15.42 to the dollar. The profit of up to 25 percent is deposited to the same Rufiyaa account the following day.

The bank offered a concrete example. Invest US$ 1,000 and you receive MVR 19,275: the MVR 15,420 owed at the peg in addition to a profit of MVR 3,855. That works out to an effective rate of MVR 19.275 for every dollar.

"By encouraging customers with US dollar income to invest in these high-yield investment pools, the Bank is able to use those invested funds to facilitate e-commerce retail transactions and other fee-generating activities. After deducting operational costs, the resulting income is distributed to investors as returns," Shareef explained.

"This allows the Bank to secure the foreign currency needed to meet the essential needs of our customers, including card payments, e-commerce transactions and the import of goods."

He described the outcome as a "sustainable ecosystem" serving investors, customers and the bank. Shareef said it would let BML ease the card limits that have frustrated customers for months. The card business is "highly profitable" for the bank, he said, but its ability to keep facilitating those transactions depends on the dollars it can earn and acquire.

"We don’t want to block e-commerce sites. So we want to involve other parties in this," he said at Tuesday's event, which featured a live demonstration of the online process and a question-and-answer session with the media.  

The rationale is the persistent dollar crunch. Over the past five years, the volume of dollars sold for overseas purchases from debit and credit cards linked to Rufiyaa accounts has grown 3.7-fold to an average of US$ 39.3 million a month this year, up from US$ 10.7 million in 2021, Shareef said. The number of customers using the service more than doubled. Between 250,000 and 300,000 people now make foreign transactions monthly on Rufiyaa cards.

"Over the past 36 months, the Bank has sold approximately US$ 1.6 billion to meet personal foreign currency requirements and business transactions, with nearly 60 percent of that amount allocated specifically to card payments," Shareef said.

"As demand continues to grow each month, sustaining these volumes of dollar sales becomes increasingly challenging. Nevertheless, we do not wish to introduce measures that would disrupt or restrict a service relied upon by such a large segment of our customers. Our objective is to ensure that this service remains sustainable."

He characterised cross-border e-commerce – the primary driver of the rapid growth – as a marker of digital adoption and rising "prosperity" rather than of the currency crisis it feeds.

At the MVR 15.42 peg, there is no reason to hand the bank a dollar. The 25 percent is what makes the transaction somewhat worth doing: 15.42 plus that premium is MVR 19.275. 

But the current black market rate hovers above MVR 20.50. The bank's offer is above the peg it is legally meant to honour, but below the parallel rate it is implicitly competing with.

The public did this math. On Mihaaru's report, 75 percent of readers reacted "angry." One commenter noted that a dollar bought on the street at MVR 20.45 and "invested" with BML at 19.275 books a loss of MVR 1.72 per dollar. The suggestion was that the scheme only appeals to someone who already holds dollars and has nowhere better to sell them. Several asked why anyone earning in dollars would accept 19.275 from the bank when the black market pays over 20. Others accused the bank of officially fixing the dollar at 19.30. Some said it has "opened a branch of the black market" under the name of investment. More than one called it a scam or a Ponzi scheme and demanded the police and the central bank investigate.

A recurring theme was the double standard. "Because it's our bank, it's called investment," one wrote, referring to the bank's slogan. "If anyone else did it, it'd be called black market." 

But a few were sympathetic to the bank's conundrum. One argued the criticism ignored that BML offers Rufiyaa-card holders dollar access no other local bank matches.

Under rules tightened from June 2025, banks must sell 90 percent of their foreign currency proceeds to the central bank at the official exchange rate of MVR 15.42. 

Fayyaz Ismail, the former chairman of the opposition Maldivian Democratic Party, called the scheme a "blatant" effort to sidestep foreign exchange laws and "the formalisation of a black market rate for USD without the approval of the [Maldives Monetary Authority]." 

Asked whether BML sought approval for the scheme and whether it was consistent with the Foreign Exchange Act – which put in place a mandatory dollar conversion regime – the central bank did not respond at the time of publication. 

Ali Hashim, a former MMA governor, said a bank is entitled to add charges to a transaction as the price of a service it provides. Once those charges are layered on, "it could come up to something higher than the MMA rate."

"When you include charges and others, you can still justify that they're still within the 20 percent band," he told the Maldives Independent. What had changed, he suggested, was the pressure of the shortage itself: "Now that we're in the situation where the demand is too high, then we have to meet that. So if you apportion, then the additional charges are justified."

On the central bank's role, Hashim said the scheme needs no special sign-off. "They're looking at it as an investment vehicle, like you would cover an investment portfolio within the bank," he said. "But on the MMA side, there won't be any special permit that you need to take." Letting banks trade currency more freely, he added, was a "very political" and "macro" decision, one the authorities had debated during his tenure under the previous administration.

The scheme is the latest turn in a series of escalating dollar controls, each one tracking the widening gap between the peg and the street. In July last year, a 30 percent surcharge was slapped on Chinese shopping sites such as Temu and Shein, alongside Alibaba, AliExpress, Lazada and eBay, almost exactly reflecting the black market premium at the time. 

Shareef said yesterday that the 30 percent was calculated from the bank's costs, such as card interchange fees. Before the transaction fee, online shopping accounted for 75 percent of BML customers' foreign purchases. Affordable Chinese platforms drove much of it. But the "Temu tax" did little to dent the habit: Maldivians kept buying, because even taxed, the prices undercut Malé shops.

Earlier this week, Rest of World described the Maldives as an "extreme example" of consumer dependence on Chinese e-commerce. That persistent appetite for dollars – for shopping, subscriptions and travel – is the outflow the bank is now trying to fund from the other side, by bidding for dollars rather than only taxing their departure.

In May, the bank capped customers at 30 overseas e-commerce transactions a month, and quietly imposed per-website daily budgets that many learned of only when their cards were declined, including for work subscriptions such as Adobe and Microsoft and for Facebook advertising.

At his weekly press conference on Monday, President Dr Mohamed Muizzu reiterated his assurance from last month that BML was "working on providing relief" with an announcement to be made by next week.

He touted the mandatory exchange requirement and the State Trading Organisation's price-controlled supply of essential food items as policy successes.

Briefing the press on Tuesday, Economic Development Minister Mohamed Saeed – who was reminded of his 2024 campaign pledge to bring the rate down if the ruling party won a parliamentary majority – deflected to former President Ibrahim Mohamed Solih's administration printing money during the Covid-19 crisis, which he contended was the root cause of the dollar shortage.

Hashim, who was governor during the pandemic period, rejected the premise. "It's a fiscal disciplinary issue that is the cause of all this," he said, calling it a failure spanning administrations rather than any single monetary decision. Persistent overspending, he argued, drove the debt the country took on, including to fund the Covid stimulus, so "it's not a monetary issue anymore." He stood by the pandemic-era expansion of the money supply on its own terms: it helped deliver a "V-shaped recovery" and stabilised the economy when it mattered. In the long run, he conceded, it was not good. But in the short run, "you have solved a problem."

Former President Mohamed Nasheed, the newly elected MDP chairman, meanwhile blamed the dollar shortage on the absence of a debt restructuring programme. 

Can a 15.42 peg and a de facto bank rate near 19.28 co-exist? Hashim's answer was that they already do, "because we are co-existing with an MVR 20.60 parallel market at the moment." But he drew the obvious inference: the black market rate now sits above the return BML is offering, which is why so many judged the scheme a losing proposition for anyone with dollars to sell.

A persistent premium is exactly what prompts the IMF to ask why the rate is not simply adjusted upward, he noted.

Hashim favours loosening the peg and letting the Rufiyaa float, with the degree of control to be decided. "The market is ready for that," he said. The old fear was that a handful of large dollar suppliers would capture a free market.

He no longer thinks that risk holds. The market has broadened, he argued, with more foreign brands whose concern for compliance makes them likely to follow whatever rules the MMA sets: "if you have a majority of them, then the market is not as oligopolistic as we thought originally."

Nearly a decade ago, the IMF's assessment was that the parallel market behaves like an oligopoly. The tourism industry “appears to be a key supplier and driver” with the stable premium indicative of “only a few large suppliers of foreign exchange who are able to adjust supply". At the time, the 10 to 15 percent premium offered a compelling incentive for resorts that needed Rufiyaa to cover operational costs.

In the present day, the Bank of Maldives appears to be betting that Maldivians and businesses sitting on dollars will prefer a 25-percent bank product to the risk of the street. Whether enough of them do so at a rate below what the black market pays will decide if the scheme eases the card squeeze or simply entrenches a two-tier dollar rate with the national bank's name on it.

Economists say such measures seek to manage an unsustainable situation rather than resolve it. A scheme that pays MVR 19.28 for a dollar does not close the gap between the peg and reality. It concedes it.