The Maldives and India have signed a USD 400 million and INR 30 billion currency swap agreement.
The agreement was signed between the Maldives Monetary Authority (MMA) and the Reserve Bank of India (RBI) on Monday afternoon, following the bilateral talks in New Delhi between Maldives President Dr. Mohamed Muizzu and Indian Prime Minister Narendra Modi.
Under the agreement, the Maldives central bank is allowed to draw a swap facility under two windows: USD or EUR window and INR window respectively, against the Maldivian currency; Rufiyaa (MVR).
The facility also allows MMA to make multiple draws, up to a maximum limit of USD 400 million in addition to INR 30 billion within the existing ‘Framework on Currency Swap Agreement for SAARC Countries, 2024-2027.’
According to the central bank, the USD/EUR swap facility will support the foreign exchange liquidity requirements, while the INR swap facility will allow for trade settlement in local currency – further enhancing and strengthening bilateral trade between both countries.
A swap facility is aimed at providing a last-resort option of funding for short-term foreign exchange liquidity requirements or balance of payment issues.