Currency Swap Agreement with Sri Lanka by Bangladesh
Recently Bangladesh has approved a currency swap facility of $ 200 million with Sri Lanka. Since this agreement, Bangladesh has become the first country in South Asia to provide significant financial assistance to Sri Lanka this year.
Foreign exchange in Sri Lanka is mainly earned through tourism, textile and tea exports, but the trade has been severely affected due to the epidemic.
Currency Swap Arrangement (CSA)
- A currency Swap agreement is an arrangement between two countries of good relations to trade in their local currencies.
- Accordingly, both countries pay for import and export trade at predetermined exchange rates, without bringing in the currency of the third country, like the US dollar.
- These types of agreements do not include the currency of a third country, eliminating the need to worry about exchange-variations.
Source – Indian Express