RBI signed Currency Swap Agreement with Central Bank of Sri Lanka
The Reserve Bank of India (RBI) on 25 March 2015 signed a 400 million US dollar currency swap agreement with the Central Bank of Sri Lanka. The agreement is valid for a period of three years from the date of signing.
According to the agreement, the Central Bank of Sri Lanka can make withdrawals of US dollar or Euro in multiple tranches up to a maximum of 400 million US dollar or its equivalent.
This agreement will further economic co-operation between the two countries and also bring in more financial stability in the region.
The Currency Swap Agreement with Sri Lanka was inked in backdrop of the announcement of May 2012 by the RBI Governor during the SAARCFINANCE Governor’s meeting, held in Nepal. At the meeting, RBI had offered swap facilities aggregating 2 billion US dollar, both in foreign currency and Indian Rupee to neighbouring countries of the SAARC region.
This facility will be available to all South Asian Association for Regional Cooperation (SAARC) member countries, that is, Afghanistan, Bangladesh, Bhutan, Maldives, Nepal, Pakistan and Sri Lanka.
The swap arrangement is intended to provide a backstop line of funding for the SAARC member countries to meet any balance of payments and liquidity crises till longer term arrangements are made or if there is need for short-term liquidity due to market turbulence.