India arranges $200m currency swap to improve Maldives reserves
The last time India gave a currency swap to the Maldives was in December 2020, when it received USD 250 million, cleared this year.
India's central bank on Thursday announced a $200 million currency swap for the Maldives' central bank to improve the country's foreign exchange reserves.
The announcement of the facility was made in a statement issued by the Reserve Bank of India (RBI), the central bank of India.
According to the RBI, this is part of currency swap agreements with SAARC countries. The facility was provided, according to the RBI:
To ensure that the country gets the foreign exchange it needs in the short term
MMA will have the right to withdraw up to $200 million in multiple tranches
India had last week loaned $100 million as budget support to the Maldives:
The loan was given through SBI by investing in a treasury bond
India has given a sovereign guarantee to SBI
There are concerns about the depletion of the country's reserves. According to the Maldives central bank, MMA statistics released this month:
The country's total reserves fell to $496.6 million at the end of October
The total reserves are down by $40.7 million compared to September
Of the total reserves, the amount of money or usable reserve is calculated by deducting short-term debt:
Short-term debt recorded at $394.5 million in October
Deducted from total reserves, the useable reserves stood at $102.1 million
The last time India gave a currency swap to the Maldives was in December 2020, when it received USD 250 million. The swap was extended by six months in July last year and was cleared earlier this year.
A currency swap is a facility in which a country keeps its own money in another country's central bank and withdraws enough foreign currency to the amount authorised.