Maldives Gets Currency Swap Extension from India
Eduteria Insights · 22 Oct 2026
Why in the news?
The Maldives has thanked India for extending the first withdrawal of ₹30 billion (₹3,000 crore) under the India–Maldives currency swap agreement. The rollover is intended to support the Maldives’ financial liquidity and reflects continued bilateral cooperation under India’s Neighbourhood First Policy.
A currency swap agreement is a financial contract where two parties, such as corporations, financial institutions, or central banks, agree to exchange principal and interest payments in one currency for equivalent amounts in another currency.
What Is the India–Maldives Currency Swap Agreement?
Imagine the Maldives facing a temporary shortage of foreign currency to meet its financial obligations. In such a situation, a currency swap arrangement can provide access to another country’s currency and help ease short-term financial pressure.
Under this arrangement, India provides financial support to the Maldives through access to Indian rupees. This can help the island nation manage liquidity requirements and maintain financial stability.
The facility operates under the Framework on Currency Swap Arrangement for SAARC Countries, signed between the Reserve Bank of India (RBI) and the Maldives Monetary Authority during Maldivian President Mohamed Muizzu’s state visit to India in October 2024.
The first withdrawal of ₹30 billion was extended to the Maldivian government on 23 April 2025. India subsequently approved the Maldives’ request to roll over this facility.
Why Is the Currency Swap Facility Important?
For the Maldives, the arrangement provides financial flexibility during periods of liquidity pressure. For India, it supports economic cooperation with a strategically important neighbor in the Indian Ocean region.
The decision also reflects India’s continued engagement with neighboring countries through financial assistance and regional cooperation.
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