COLOMBO (EconomyNext) – Sri Lanka’s Central Bank has signed a 400 million US dollar Currency Swap Agreement with the Reserve Bank of India (RBI) under which it can draw funds in dollars or euros in multiple tranches.
The agreement, signed Wednesday, is valid for three years and "is expected to further economic co-operation between the two countries," an RBI statement said.
"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."
The RBI said in May 2012, the Reserve Bank of India offered at a South Asian central bank governor’s meeting in Nepal, offer swap facilities of two billion dollars, both in foreign currency and Indian rupees to neighbouring countries of the SAARC region.
The facility is available to all South Asian Association for Regional Cooperation (SAARC) member countries; Afghanistan, Bangladesh, Bhutan, Maldives, Nepal, Pakistan and Sri Lanka.