Context:
RBI announces SAARC Currency Swap Framework for 2024-2027
Key Highlights of the revised Framework:
- A separate INR Swap Window has been introduced with various concessions for swap support in Indian Rupee (Total corpus of the Rupee support is ₹250 billion).
- RBI will continue to offer swap arrangement in USD and Euro under a separate US Dollar/ Euro Swap Window with an overall corpus of US$ 2 billion.
Currency Swap Arrangement (CSA):
- A contract under which 2 counterparties agree to exchange two currencies at a set rate and then to re-exchange those currencies at an agreed upon rate at a fixed date in future.
- Objectives of CSA –
- To meet short term foreign exchange liquidity requirements
- To ensure adequate foreign currency to avoid Balance of Payments (BOP) crisis till longer arrangements can be made.
Other Significant CSAs of India:
- BRICS Contingent Reserve Agreement signed in 2015.
- India-Japan bilateral CSA
- India-UAE CSA
- India-Sri Lanka CSA
Related Article: SAARC
Source: RBI
Previous Year Question
‘Global Financial Stability Report’ is prepared by the:
[UPSC Civil Service Exam – 2016 Prelims]
(a) European Central Bank
(b) International Monetary Fund
(c) International Bank for Reconstruction and Development
(d) Organisation for Economic Cooperation and Development
Answer: (b)