India-Maldives forex swap: RBI’s $400 million help lifts FX reserves; Fitch cites easing of liquidity pressure in ranking observe
India on Saturday welcomed the advance within the Maldives’ overseas alternate (FX) reserves, noting with satisfaction that the $400 million forex swap between the Reserve Financial institution of India (RBI) and the Maldives Financial Authority (MMA) performed a major position in easing the island nation’s exterior liquidity pressures.The Indian Excessive Fee in Male stated it “famous with satisfaction” that the rise within the Maldives’ FX reserves — highlighted in a latest sovereign credit standing report — was primarily pushed by the $400 million drawdown beneath the RBI-MMA forex swap association activated in October 2024.“The forex swap alleviated imminent exterior liquidity strains,” the Indian Excessive Fee posted on X, citing the most recent Fitch credit standing replace on the Maldives.International ranking company Fitch Scores, which affirmed the Maldives’ long-term foreign-currency issuer default ranking at ‘CC’ on Thursday, acknowledged the essential help prolonged by India in shoring up the nation’s reserves, PTI reported. The ranking company attributed the reserve buildup to a mixture of things, together with sturdy tourism receipts, the implementation of a brand new Overseas Forex Act mandating 20% alternate of tourism-linked foreign exchange earnings, and monetary help from India.Based on the Solar On-line information portal, Fitch famous that whereas the gross FX reserves had improved — aided notably by the RBI’s forex swap — the Maldives continues to face structural fiscal and exterior challenges.Fitch projected the nation’s fiscal deficit to widen to 14.5% of GDP in 2025, up from 14% in 2024, pushed by excessive recurrent spending, significantly rising public sector wages and delays in implementing reforms associated to subsidies and healthcare expenditure. The company additionally warned that these vulnerabilities might complicate refinancing of Maldives’ massive exterior debt obligations within the close to future.India’s forex swap help to the Maldives is a part of a broader effort to help its maritime neighbour in navigating macroeconomic headwinds. The swap association — prolonged beneath the SAARC framework — has beforehand been deployed to stabilize short-term greenback liquidity within the area.Saturday’s acknowledgment by Indian authorities comes amid evolving India-Maldives ties, the place financial cooperation continues to be a cornerstone regardless of political frictions.
