Bangladesh Bank accepts $ 200 million currency swap with Sri Lanka
The Bangladesh Bank’s board on Sunday approved a $ 200 million currency swap plan with Sri Lanka, which is struggling to maintain a moderate foreign exchange reserve.
The currency swap deal would be finalized after obtaining a government-approved legal review, BB officials told New Age after the meeting.
BB Governor Fazle Kabir chaired the meeting at his headquarters in Dhaka.
Under the currency swap proposal project, the BB would provide up to $ 200 million in foreign exchange to meet Sri Lanka’s foreign exchange spending, officials said.
Against the fund, the Sri Lankan would keep the same amount of his local currency, the rupee, with the Bangladesh Bank with a government guarantee.
BB would receive around 1 to 2 percent plus Sri Lanka LIBOR as interest.
The currency swap deal also contains a refinancing condition, allowing Sri Lanka to extend the loan repayment period, BB officials said.
The currency exchange initiative was taken after Sri Lankan Prime Minister Mahinda Rajapaksa visited Bangladesh to join in celebrations for the Golden Jubilee of Bangladesh’s Independence.
Prior to entering into a currency swap deal with Bangladesh, Sri Lanka already signed a 10 billion yuan or $ 1.5 billion swap with the People’s Bank of China and requested a $ 1 billion swap from India, according to media reports.
Bangladesh’s reserve grew rapidly after the Covid-10 outbreak, while Sri Lanka’s reserve came under pressure following the coronavirus outbreak that hit its tourism sector severely.
As of May, Bangladesh’s foreign exchange reserve stood at over $ 45 billion.
Sri Lanka’s foreign exchange reserve stood at $ 4.05 billion in March, according to available data.