India announces 1.5 bln dollar currency swap with Sri Lanka

The Central Bank of Sri Lanka on Wednesday announced a 1.5 billion U.S. dollar currency swap agreement with the Reserve Bank of India, it said in a statement.

The currency swap was agreed between the two governments during Indian Prime Minister Narendra Modi's visit to Sri Lanka in March.

Accordingly, a currency swap agreement between the two Central Banks was signed on March 25, whereby 400 million U.S dollars was made available to the Central Bank of Sri Lanka from the Reserve Bank of India's financing facility for South Asian Association for Regional Cooperation (SAARC) member country Central Banks, the statement said.

"A further amount of 1.1 billion U.S. dollars has been approved by the Union Cabinet of the Government of India for augmenting the currency swap arrangement between the two Central Banks. This additional amount is expected to be made available in due course," the statement said.

The swap facility is in the interest of creating a stable currency market, the Central Bank pointed out. The currency swap is part of renewed attempts by both countries to promote relations that had cooled somewhat in previous years.

The currency swap would help boost Sri Lanka's rupee, which has been under depreciation pressure for about a year and increase stability of foreign reserves, analysts said. Endi