Maldives and India sign USD 400 million currency swap deal

Maldives has signed an USD 400 million and INR 30 billion currency swap agreement with India.

The agreement was signed between the Maldives Monetary Authority (MMA) and the Reserve Bank of India (RBI) on Monday afternoon, following bilateral talks in New Delhi between Indian Prime Minister Narendra Modi and visiting Maldivian President Dr. Mohamed Muizzu.

The agreement allows the MMA to draw a swap facility under two windows: USD or EUR window and INR window, respectively, against the Maldivian Rufiyaa (MVR).

The swap facility will allow the 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 Arrangement for SAARC Countries, 2024-2027’.

According to the MMA, the USD/EUR swap facility will support the foreign exchange liquidity requirements. And the INR swap facility will allow trade settlement in local currency, which will further enhance and strengthen the bilateral trade between both countries.

A swap facility is intended to provide a backstop line of funding for short-term foreign exchange liquidity requirements or balance of payment issues.

RBI’s currency swap program for SAARC countries was put in place in 2009, and came into effect in 2012.

The Maldives first tapped into the program in 2016, and has used USD 700 million since then.