India and Bhutan on 8 March 2013 signed a currency swap agreement for up to 100 million US dollars to strengthen economic co-operation between both the countries.
The currency swap arrangement was signed between the Reserve Bank of India and the Royal Monetary Authority of Bhutan (RMAB).
Effects of the Agreement signed
• It enables RMAB (Royal Monetary Authority of Bhutan to make withdrawals of US dollar, euro or Indian rupee in multiple tranches up to a maximum of 100 million dollars or its equivalent.
• The swap agreement is intended to provide a precaution line of funding for SAARC member countries to meet any balance of payments and liquidity crisis till longer term arrangements are made or if there is need for short-term liquidity due to market turbulence.
• The arrangement would be for a three-year period and would help bring financial stability in the region.
Earlier, In May 2012, RBI had announced it would offer swap facilities aggregating 2 billion dollars, both in foreign currency and Indian rupee, to SAARC member countries — Afghanistan, Bangladesh, Bhutan, Maldives, Nepal, Pakistan and Sri Lanka.