MMA states Maldives' official reserves will be $606 million higher than expected by the end of the year.

The main challenge in maintaining the exchange rate in the foreign exchange market is that the printing of money to manage the government's cash flow after the COVID-19 pandemic has resulted in an increase in rupee surplus liquidity in the banking system.

In order to mitigate the challenges of keeping the exchange rate of the rupee in check, MMA is preparing to withdraw (mop-up) from the banking system using the increased surplus liquidity monetary resources. "The board has made changes in MMA's monetary policy instruments," it said.

"As part of our ongoing efforts to improve the status of the country's official reserves, the government and MMA are working together to issue refinance green bonds, "We are also in the process of completing all the technical work for setting up a USD 400 million foreign currency swap arrangement with the Reserve Bank of India under the SAARC framework and signing the agreement," the MMA said in a statement.

The MMA said that in line with the government's medium-term fiscal and debt strategy, measures to cut costs and increase revenues will improve the country's fiscal situation. Despite challenges to the financial system, it has assured that the joint efforts of MMA, finance ministry, relevant government ministries and all financial institutions will lead to the desired results.

MMA's statement comes at a time when international credit rating agency Fitch has downgraded the country's rating.