India Approves ₹30 Billion Currency Swap for Maldives to Boost Economic Stability

India has approved the ₹30 billion currency swap facility for the Maldives under the SAARC framework. This swap has strengthened the economic cooperation between the two nations. This move comes at that critical time when the global uncertainties and the regional pressures are affecting small economies. This support reflects the India’s continued the commitment as the reliable partner and highlights the importance of the financial stability tools like currency swaps to manage the external shocks and maintain the economic balance.

India Approves ₹30 Billion Swap Under SAARC Framework

India via the Reserve Bank of India has allowed the Maldives to withdraw the ₹30 billion under the SAARC Currency Swap Framework (2024-2027).

This facility will falls under the INR Swap Window and it is designed to provide the quick liquidity support to member nations.

The agreement was formalized during the visit of Maldives President Mohamed Muizzu to the India in the October 2024 and which have reinforced the bilateral economic ties.

What Is the SAARC Currency Swap Framework?

The South Asian Association for Regional Cooperation (SAARC) has introduced the currency swap framework in 2012 to help the member to countries manage short-term foreign exchange shortages.

Key Features

• It provides the quick access to foreign currency liquidity.
• It also reduces the dependence on costly international borrowing.
• It will also helps to stabilize the balance of payments.
• And it will strengthens regional financial cooperation.

Since the launch India have extended over the $1.1 billion support to the Maldives under this framework.

Recent Financial Developments Between India and Maldives

Interestingly the approval of this ₹30 billion swap coincided with Maldives have repaid the $400 million swap facility previously availed under this bilateral agreement.

This repayment have signals,

• The strong financial discipline by Maldives.
• Also the continued trust between India and Maldives.
• The sustainable use of the external financial support mechanisms.

India’s Strategic Role: Beyond Financial Support

India’s assistance to the Maldives is not just economic but it is also strategic.

Under the Neighbourhood First policy and Vision MAHASAGAR.

India have positions itself as the first responder in crises.

It also have strengthens the regional influence.

This will also to counters the growing external geopolitical presence in South Asia.