India, Bhutan sign currency swap agreement
India and Bhutan have inked a currency swap agreement for up to $100 million to promote economic co-operation b/w the two nations.
The pact was signed by the Reserve Bank of India and the Royal Monetary Authority of Bhutan (RMAB).
It enables RMAB to make withdrawals of US dollar, euro or Indian rupee in multiple tranches up to a maximum of $100 million or its equivalent.
Why this agreement?
- The agreement is in line with RBI announcement in May 2012 to offer swap facilities aggregating $2 billion, both in foreign currency and Indian rupee, to SAARC member nations — Afghanistan, Bangladesh, Bhutan, Maldives, Nepal, Pakistan and Sri Lanka.
- This pact will provide emergency funding for SAARC member countries to meet any balance of payments and liquidity crisis till longer term arrangements are made or if there is need for short-term liquidity due to market upheaval. The arrangement would be for a 3-year period and would help bring financial stability in the region.