What the inking of the India-Sri Lanka currency deal means

New Delhi, July 25: India has inked a currency deal with Sri Lanka and extended 400 million USD currency swap facility with Colombo.

This was done to help Colombo tide over the economic crisis it is facing in the wake of COVID-19. This deal inked between the Reserve Bank of India and Central Bank of Sri Lanka would help Colombo mitigate the risk of further fluctuations on the rates of interests from loans from India.

Officials of the two sides had held discussions on rescheduling repayment of around 840 million USD debt by Sri Lanka to India. The Indian High Commission in Colombo said that it would continue to facilitate such engagement as party of New Delhi's overall commitment to work with Sri Lanka to counter and mitigate the effects of the pandemic.

This is an important move as China looks to expand its footprint in Sri Lanka. Recently the Sri Lankan government had constituted a panel of give officials to review the deal it had inked with India and Japan in 2019 for the development of the East Container Terminal of the Colombo Port.

The government also accepted the demand of the agitating workers to install in the ECT three cranes imported from China for the adjacent Jaya Container Terminal. This New Delhi believes was orchestrated by China.