RBI signs $400 million currency swap pact with Sri Lanka

The Reserve Bank of India (RBI) has signed a US $400 million currency swap agreement with the Central Bank of Sri Lanka.
The currency swap agreement will allow central banks of both nations to make withdrawals of US Dollar or Euro in multiple tranches up to a maximum of USD 400 million or its equivalent.
The agreement will be valid for a period of three years and further economic co-operation between the two countries. It will also bring in more financial stability in the region.
Background

• In SAARCFINANCE Governor’s meeting held in Nepal in 2012, RBI had announced that it will offer currency swap facilities aggregating USD 2 billion. This facility will be offered in both foreign currency and rupee to SAARC member countries.
• In this regard, the swap arrangement are signed to provide a backstop line of funding for the SAARC member countries to meet any balance of payments (BoP) and liquidity crises till long-term arrangements are made.
• The facility will be available to all SAARC member countries including India, Afghanistan, Bangladesh, Bhutan, Maldives, Nepal, Pakistan and Sri Lanka.

Month: Current Affairs - March, 2015