Money & Banking

RBI signs currency swap agreement with Central Bank of Sri Lanka

Our Bureau. Mumbai | Updated on July 27, 2020 Published on July 27, 2020

The Reserve Bank of India (RBI) has signed a currency swap agreement with the Central Bank of Sri Lanka, whereby the latter can make drawals of US dollar, euro or Indian rupee in multiple tranches up to a maximum of $ 400 million or its equivalent.

This agreement, which is valid till November 13, 2022, has been signed under the South Asian Association for Regional Cooperation (SAARC) Currency Swap Framework 2019-22, the RBI said in a statement.

The SAARC Currency Swap Framework came into operation on November 15, 2012, to provide a backstop line of funding for short-term foreign exchange liquidity requirements or short-term balance of payments stress till longer term arrangements are made.

According to its website, the RBI had last signed a special currency swap agreement with the Central Bank of Sri Lanka in March 2016. Under the arrangement, the Central Bank of Sri Lanka could draw up to $700 million for a maximum period of three months.

As per RBI’s March 29, 2016 statement: “The proposal to extend the additional currency swap facility of $700 million to Sri Lanka for a limited period was decided with concurrence of the Union Government in March 2016 for short-term liquidity management in the context of India’s strong bilateral relations and economic ties with Sri Lanka.”

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Published on July 27, 2020
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