Colombo: Reserve Bank of India has agreed for a USD 1.5 billion currency swap agreement with the Sri Lankan central bank to help the island nation keep its currency stable, Prime Minister Narendra Modi said on Friday.
The agreement was announced after a meeting between Modi and Sri Lankan President Maithripala Sirisena here.
"The Reserve Bank of India and the Central Bank of Sri Lanka have agreed to enter into a Currency Swap Agreement of USD 1.5 billion. This will help keep the Sri Lankan rupee stable," said Modi, who reached here early this morning on the last leg of his three-nation tour that included Seychelles and Mauritius.
The currency swap pact assumes significance as the Sri Lankan rupee has been under pressure for quite some time. Despite attempts made by the central bank, the currency has been losing value since the beginning of this year.
At the current valuation, one Indian rupee is equivalent to 2.12 Sri Lankan Rupee. It has lost almost three percent value in comparison to the Indian rupee so far in 2015.
Modi is the first Indian Prime Minister to come to Sri Lanka on a standalone bilateral visit since 1987.
Last month, Sirisena visited India on his first foreign trip as Sri Lankan President.
Modi said that economic ties are "a key pillar of relationship between the two countries" and the bilateral trade has grown impressively over the past decade.
"Economic ties are a key pillar of our relationship. The progress we have made reflects our shared commitment to stronger economic cooperation," he said.
"I am aware of your concerns about trade with India. As I said in Delhi, we will try and address them," the Prime Minister said.
In a press briefing, Foreign Secretary S Jaishankar, who is accompanying Modi on the trip, elaborated on the currency swap deal.
"We also confirmed our willingness to extend the swap arrangement which would help stabilise Sri Lankan currency whenever it comes under stress.
"We had an earlier swap arrangement to the tune of USD 400 million. This has now been extended to USD 1.5 billion.
He said that on the economic side, investing issues were discussed, with the Sri Lankan side very strongly welcoming more Indian investments in Sri Lanka as "we did Sri Lankan investments in India".
