Maldives Monetary Authority has signed a USD 200 million Currency Swap Agreement with the Reserve Bank of India under the SAARC Currency Swap Framework.
This swap facility will allow the MMA to make multiple withdrawals up to a maximum limit of USD 200 million from the RBI, as a backstop line of funding for short term foreign exchange liquidity requirements.
It is not known how long both parties have agreed to pay the swap. However, currency swap agreements usually do not allow for such a long repayment period.
Earlier in 2019, the government signed a USD 400 million currency swap agreement with India. The money was repaid last year. The payments reduced total reserves by USD 791 million, nine percent.
Maldives’s reserves stood at USD 604 million as of November but usable reserves stood at USD 219 million.
The currency swap comes while India provided USD 100 million in budget support to Maldives late last month. USD 100 million loan as budgetary support was given through a Treasury Bond sale to the State Bank of India branch in Malé, Maldives.
According to India, the financial assistance of USD 100 million budgetary support was given to tide over the difficult economic situation in the Maldives.
