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Dhaka Clears Currency Swap For Lanka

Dhaka Clears Currency Swap For Lanka:

Bangladesh has cleared a $200 million currency swap facility for Sri Lanka, becoming the first South Asian country to extend crucial financial assistance to the island nation this year.

  • With Sri Lanka’s main foreign exchange earning sectors — tourism, export of garments, and tea — badly hit due to the pandemic, the country has been struggling to maintain its reserves in the face of a daunting debt repayment schedule.
  • Currency Swap Arrangement is an arrangement between two friendly countries to involve in trading in their own local currencies.
  • As per the arrangements, both countries pay for import and export trade at the predetermined rates of exchange, without bringing in a third-country currency like the US Dollar.
  • In such arrangements no third country currency is involved, thereby eliminating the need to worry about exchange variations.