India has extended support of $1.1 billion to the Central Bank of Sri Lanka (CBSL) under a special currency swap agreement. The support was extended by the Reserve Bank of India (RBI) to CBSL to stabilize the exchange rate of the Sri Lanka’s currency. The amount is in addition to the $ 400 million received by CBSL in April, under this arrangement to boost official reserves of Sri Lanka.
The signing of the special currency swap agreement for $1.1 billion by the CBSL with the RBI took place earlier in July. Under the arrangement, the Sri Lankan bank can draw up to $1.1 billion for a maximum period of six months. With the enhanced level of official reserves, the CBSL expects that the exchange rate would stabilize in line with sound macroeconomic fundamentals and movements of other currencies of major trading partners.
Further the support from RBI to CBSL will strengthen India’s bilateral relations and economic ties with Sri Lanka. This will also help Sri Lanka in availing a safety net against the probable volatility of their currency and provide short-term liquidity that would contribute to Sri Lanka’s economic recovery.
Prime minister of Sri Lanka, Ranil Wickremesinghe will be in Delhi on a working visit from September 14 to 16. During this visit India can assure Prime Minister Wickremesinghe that it will provide economic assistance and support that it requires and it return will require fairness in its dealing with India and its own citizenry.