India and Japan on Monday struck a US$75 billion bilateral currency swap deal — less than a week after Tokyo struck a similar US$30 billion pact with Beijing — a move aimed at boosting confidence in the country`s foreign exchange and capital markets. The agreement, valid until November 13, 2022, was signed as part of the South Asian Association for Regional Cooperation`s (SAARC) 2019-22 currency swap, the RBI said in a statement. Indian Prime Minister Narendra Modi said on Friday that economic relations are an important pillar of a strong relationship between India and Sri Lanka. During his visit to the island state, the Indian prime minister shared India`s commitment to effectively improving trade cooperation with Sri Lanka to the Colombo media. Modi said Indian and Sri Lankan customs authorities reached an agreement on Friday and expressed hope that the move will simplify trade and eliminate non-tariff barriers between the two economies. Modi also said Lanka CIO, Indian Oil`s subsidiary in Sri Lanka, and Ceylon Petroleum Corporation have also agreed to develop China Bay`s Upper Tank farm. The agreement signed under the saarc Currency Swap Framework 2019-22 would be valid until 13 November 2022. The Reserve Bank of India (RBI) has signed a currency exchange agreement with the Central Bank of Sri Lanka allowing it to draw US dollars, euros or Indian rupees in several tranches of up to $400 million. Financial Express is on Telegram.
Click here to join our channel and stay up to date with the latest News and Updates from Biz. The RBI statement of 29 March 2016 states that “the proposal to extend the additional $700 million foreign exchange swap facility to Sri Lanka for a limited period of time was adopted in March 2016 with the agreement of the Government of the Union for short-term liquidity management in the context of India`s close bilateral and economic relations with Sri Lanka”. India`s high commission in Colombo said the currency swap agreement will remain available until November 2022. Sri Lanka said in April it would reach an agreement with the RBI for a $400 million cross-currency swap under the South Asian Association for Regional Cooperation (SAARC). In May, Sri Lankan President Gotabaya Rajapaksa asked India for a special $1.1 billion swap facility. The RBI also offers similar swap lines for central banks in the SAARC region in a total corpus of $2 billion. As part of 2019-22, the RBI will continue to offer a swap arrangement within the total corpus of $2 billion. Other countries can withdraw money in US dollars, euros or Indian rupee. This mechanism was initially put into operation on 15 November 2012 to provide a short-term funding line for short-term liquidity requirements or balance of payments crises, until longer-term arrangements are concluded. The Facility shall be available to all SAAC Member States, subject to the signing of bilateral exchange agreements. .