RBI signs $400 mn currency swap with Sri Lanka

RBI signs $400 mn currency swap with Sri Lanka

  • The Reserve Bank of India (RBI) has signed an agreement for extending a $400-million currency swap facility to Sri Lanka.
  • This currency swap is used to boost the foreign reserves and ensure the financial stability of the country, which is badly hit by the COVID-19 pandemic.
  • The currency swap arrangement will remain available till November 2022.
  • Sri Lanka was set to enter into an agreement with the RBI for a currency swap worth $400 million under the South Asian Association for Regional Cooperation (SAARC) framework.
  • In the swap arrangement, a country provides dollars to a foreign central bank, which, at the same time, provides the equivalent funds in its currency to the former, based on the market exchange rate at the time of the transaction.
  • The parties agree to swap back these quantities of their two currencies at a specified date in the future, which could be the next day or even two years later, using the same exchange rate as in the first transaction.
  • Governor of RBI: Shaktikanta Das; Headquarters: Mumbai.
  • RBI Founded: 1 April 1935, Kolkata.
  • President of Sri Lanka: Gotabaya Rajapaksa.
  • Prime Minister of Sri Lanka: Mahinda Rajapaksa.
  • Capital of Sri Lanka: Sri Jayawardenepura Kotte.
  • Currency of Sri Lanka:  Sri Lankan rupee.