RIFKA ZIYARD
COLOMBO : Further, to the Prime Minister Mahinda Rajapaksa’s State Visit to Bangladesh on 19 – 20 March 2021 at the invitation of Prime Minister of Bangladesh Sheikh Hasina,
a joint statement by both Government officials stated that the Sri Lankan and Bangladeshi central banks would conduct talks over a possible swap arrangement. The officials have now confirmed that in principle the Bangladesh Bank (the Central Bank of Bangladesh) board has approved a draft $200-million currency swap deal with Sri Lanka.
Under the draft currency swap proposal, the Bangladesh Bank would provide up to $200 million in foreign currency to meet Sri Lanka’s foreign currency expenditures, the officials said.
Against the fund, Sri Lankan would keep a same amount of its local currency, Rupee, with the Bangladesh Bank along with a government guarantee.
The interest rate agreed would be 1-2 per cent plus LIBOR from Sri Lanka. The currency swap agreement also contains a rollover condition, allowing Sri Lanka to extend the period of repayment of the loan.
A currency swap is a transaction in which two parties exchange an equivalent amount of money with each other but in different currencies. The parties are essentially loaning each other money and will repay the amounts at a specified date and exchange rate.
The currency swap agreement would be finalized after getting a legal vetting approved by the government, the Bangladesh Bank officials shared further to a meeting held in Dhaka chaired by Fazle Kabir, the Governor, Bangladesh Bank.
