The Reserve Bank of India (RBI) introduced a new currency swap window for SAARC countries worth Rs25,000 crore.
The currency introduced on Thursday (June 27) for a period of three years 2024-27, for swap support in Indian Rupee for South Asian Association for Regional Cooperation (SAARC) countries.
SAARC countries will be able to take advantage of currency swaps through bilateral agreements with the Reserve Bank of India. Countries will get various concessions to support the Indian currency, according to The Economic Times.
Saarc consists of eight member countries: Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka.
Notably, the RBI plans to maintain swap agreements in US Dollar as well as Euro through a separate US Dollar/Euro Swap Window totaling $2 billion, NDTV reports.
The Saarc Currency Swap Facility started on 15 November 2012 to offer a back-up funding line for short-term foreign exchange liquidity needs or balance of payment crises in Saarc countries until long-term arrangements can be made.
However, the currency swaps were first introduced in 1981 between the World Bank and IBM. The two saparate companies of two countries take advantage of this swap of two currencies to the reduce exchange rate risk.
