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India, Maldives sign $400 million currency swap agreement

Ibrahim Mohamed Solih Photograph:( AFP )

WION Web Team New Delhi Jul 22, 2019, 06.49 PM (IST)

India and the Maldives on Monday signed currency swap agreement for $400 million as part of the $1.4 billion economic package announced last year.

The package was announced during the visit of Maldivian President Ibrahim Mohamed Solih in December 2018. The swap will allow the countries to exchange currencies with pre-determined terms and conditions. The primary aim of currency swap is to avoid risks in foreign exchange market and exchange rate.

As part of the package, India will provide the cash in the form of budgetary support, currency swap, and concessional lines of credit to fulfill the Maldives' socio-economic development programmes.

India and the Maldives signed four agreements during Solih's visit last year. One was an agreement on the facilitation of visa arrangements which will ease the issuance of visas for the people of both countries.

PM Modi noted that the new agreement will address common concerns and ensure that people-to-people contacts are enhanced. President Solih said the agreement will allow many Maldivians who send their children to school in India to be able to accompany them. The agreement also facilitates easier visa arrangements for Maldivian citizens and their families to come to India for medical treatment.

The Maldives is one of the very few countries with which India has a visa-free arrangement.

India's relationship with the Maldives had suffered under the previous Yameen government who had junked his country's pro-India policy for a pro-China policy.