Should you save in USD or MVR?
- Mohamed Anas Riza
- Nov 29, 2020
- 2 min read
Let's say you got your **** together and have begun saving.
Is there more value in saving in USD at a time where it's (even) harder to come by?
Yes and no.
Assuming that you are building up your savings and you don't intend to touch it for a while (for example, saving for an apartment) then you're better off keeping that in MVR.
The simple reason being that on average, the interest/profit rates given out by Bank on MVR is much higher compared to USD. This means that you will be able to grow your money without doing anything while it stays nice and cozy tucked away in your Savings/Fixed Deposit Account.
Maldives being very reliant on foreign currency for imports, it has become very difficult to find USD from Banks and getting your hands on it via "alternative" sources is very expensive. Also, new policies against the use of your debit cards for the purpose of online trading have restricted your options even further (a conversation for another day).
That said, it's always nice to keep some USD on hand in case of emergencies. Given the current market conditions, you'd struggle to get some dollars let alone in higher denominations. Even if you kept it in a Bank, it is not likely that they'll let you withdraw in 100's since physical notes are also at an all time low due to reduced number of tourists.
So, if you have some dollars already saved, should you sell this on "alternative" markets?
Disregarding the fact that it is illegal (and immoral) unless the party is a listed Authorized Money Exchanger at the MMA, the profit you may get from this is unlikely to be significant unless the amount is considerably high. It would be wiser to hold onto your dollars and use it on your online purchases and travel (when things finally get better).
What's the best way to invest/save your dollars?
Some Banks, either based on the total amount or the duration can still offer you a good deal if you want to hold onto or grow your USD. The best way to help your money grow is to keep it in a Fixed Deposit rather than a regular Savings Account.
For instance, the profit return at MIB's General Investment Accounts (GIA) for September 2020 was 3.72% for 12 months instead of a measly 0.93% for a savings account. Check out their monthly publication for the GIA rates to see how much you can potentially generate:
You may also consider CBM's Power Savings Account where you can earn more based on the amount that you place. Currently, savings below USD 5,000 is offered at 1.25% (which is still better than most Banks) while you can enjoy up to 1.50-1.75% based on the account balance. To make the deal even sweeter, although the interest is calculated per annum, the payment is made to your account on a monthly basis!
I'm still confused, what do I do?
If you're still unsure or tl;dr then heed this:
Keep some physical USD around (ideally in larger notes) for a rainy day but if you want to see your money grow, stick with savings via MVR for now.
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