India and Sri Lanka sign currency swap agreement
The Central Bank of Sri Lanka can make drawals of US Dollar or Euro in multiple tranches up to a maximum of $400 million or its equivalent, RBI said in a release.
The agreement, which will be valid for a period of three years from the date of signing, is expecte The arrangement will also further the financial stability in the region, RBI said.
During Indian Prime Minister Narendra Modi's visit to Sri Lanka earlier this month, the RBI and the Central Bank agreed to enter into a Currency Swap Agreement of $1.5 billion to help keep the Sri Lankan rupee stable.
RBI offers currency swap facilities aggregating $2 billion, both in foreign currency and Indian Rupee to neighboring countries of the SAARC region.
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. ■