India Finalises $400 Million Currency Swap With Sri Lanka
India will also consider President Rajapaksa’s request for further aid.
On Sunday, India announced a $400 million currency swap deal aimed at helping Sri Lanka under the SAARC framework. Moreover, it’s also being said that Colombo’s request for a bilateral swap facility of $1.1 billion is currently being considered by the Indian government. A currency swap facility is aimed at helping a country obtain foreign currency loans at better interest rates than by borrowing directly from the market. Repayment is done at the exchange rate fixed at the time of borrowing. This eliminates risks due to fluctuations in exchange rates.
The currency swap was extended by India following a request from Sri Lanka in order to cope with the impact of the COVID-19 pandemic. “These positive developments illustrate the active implementation of the leadership-level commitment to work together for addressing the challenges arising from the Covid-19 pandemic, and further the mutually beneficial India-Sri Lanka partnership, including in the economic domain,” said the Indian High Commission in Colombo in a statement.
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