{"id":81244,"date":"2021-02-09T20:59:35","date_gmt":"2021-02-09T15:29:35","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=81244"},"modified":"2021-03-01T14:22:32","modified_gmt":"2021-03-01T08:52:32","slug":"currency-swap-facility","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/currency-swap-facility\/","title":{"rendered":"Sri Lanka settles &#8220;Currency Swap Facility&#8221; with India"},"content":{"rendered":"<p><strong>What is the News?<br \/>\n<\/strong>The Central Bank of Sri Lanka(CBSL) has settled a $400 million currency swap facility from the Reserve Bank (RBI) of India.<\/p>\n<p><strong>What is a Currency Swap Facility?<\/strong><\/p>\n<ul>\n<li>The term swap means exchange. Under this agreement, two contracting countries loan each other a specified amount in local currencies.<\/li>\n<li>The parties agree to swap back this amount at a specified date. It uses the same exchange rate as agreed initially.<\/li>\n<li>This facility uses the local currencies of the countries under agreement. Thus, it eliminates the need for the currency of any other country like US Dollars.<\/li>\n<\/ul>\n<p><strong>Benefits of Currency Swap facility:<\/strong><\/p>\n<ul>\n<li>The swap operations carry no exchange rate or other market risks. The transaction terms are set in advance.<\/li>\n<li>It reduces the need of maintaining foreign exchange reserves for bilateral trade. Thus, it promotes bilateral trade.<\/li>\n<li>Hence, it ensures financial stability (protecting the health of the banking system).<\/li>\n<\/ul>\n<p><strong>Examples of Currency Swap Arrangement:<\/strong><\/p>\n<ul>\n<li><strong>India-Japan Currency Swap: <\/strong>\n<ul>\n<li>In 2018, India and Japan had signed a bilateral currency swap agreement.<\/li>\n<li>Under this, RBI will get a certain amount of yen or dollars and the Bank of Japan will get an equivalent amount in Indian rupees on a decided swap rate.<\/li>\n<li>After a specified period, both the countries will repay the amount at the same swap rate.<\/li>\n<\/ul>\n<\/li>\n<li><strong>SAARC Currency Swap Framework 2019-22: <\/strong>\n<ul>\n<li>It came into operation in 2012. In 2019, the RBI revised the framework from 2019-2022. Under this, RBI will continue to offer swap arrangement within the overall corpus of USD 2 billion.<\/li>\n<li>The currency swap facility will be available to all SAARC member countries subject to their signing the bilateral swap agreements.<\/li>\n<li>Based on the terms and conditions of the framework, the RBI would enter into bilateral swap agreements with SAARC central banks who want to avail swap facility.<\/li>\n<li>The drawls can be made in US Dollars, Euro, or Indian Rupee. The framework also provides certain concessions for swap drawals in Indian Rupee.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p><strong>Source: <\/strong><a href=\"https:\/\/epaper.thehindu.com\/Home\/MShareArticle?OrgId=GON88GUIP.1&amp;imageview=0\"><strong>The Hindu<\/strong><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>What is the News? The Central Bank of Sri Lanka(CBSL) has settled a $400 million currency swap facility from the Reserve Bank (RBI) of India. What is a Currency Swap Facility? The term swap means exchange. Under this agreement, two contracting countries loan each other a specified amount in local currencies. The parties agree to&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/currency-swap-facility\/\">Continue reading <span class=\"screen-reader-text\">Sri Lanka settles &#8220;Currency Swap Facility&#8221; with India<\/span><\/a><\/p>\n","protected":false},"author":10317,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1566,1351,1310,164,9],"tags":[1333,1457],"class_list":["post-81244","post","type-post","status-publish","format-standard","hentry","category-daily-factly-articles","category-daily-news","category-daily-news-updates","category-international-relations-daily-factly-articles","category-public","tag-ir_0","tag-ir_02","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1702503672},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/81244","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10317"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=81244"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/81244\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=81244"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=81244"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=81244"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}