A currency swap agreement of US$ 400 million has been signed between Maldives and neighboring India.
The agreement was signed on Monday by Governor of central bank Maldives Monetary Authority, Ahmed Naseer and Executive Director of Reserve Bank of India, Rabi N Mishra.
The currency swap agreement is a part of the US$ 1.4 billion economic package signed by President Ibrahim Mohamed Solih during his state visit to India last December.
The agreement established between the central banks of both countries involves the exchange of currency between both countries.
Under the agreement, Maldivian currency will be stored at India's central bank, and an equivalent amount in Indian currency will be kept at the Maldives central bank. The funds may be exchanged at an agreed time. Due to this arrangement, the demand for foreign currency will decrease, and allow for Maldives to make payments to India in Maldivian currency.
The Maldives made a similar currency swap agreement with India in the past. During the previous administration, a currency swap agreement of US$ 200 million was signed between the two countries.