India and UAE sign a 35 billion INR currency swap agreement

India and the UAE have signed 2 agreements including one on currency swap after the External Affairs Minister Sushma Swaraj held lengthy discussions with her counterpart Abdullah bin Zayed . The two delegations also talked about

The currency swap agreement will help boost investment and enable direct trade without using dollars or other international currencies. The swap is for 2 billion dirhams or 35 billion Indian rupees ($496 million), depending on which central bank requests the amount, an Indian embassy statement said.

“The bilateral currency swap agreement between India and the UAE is expected to reduce the dependency on hard currencies like the U.S dollar,” the statement said, adding that the two central banks had agreed the deal.

The currency swap allows two countries to trading in their own currency and payments to import and export trade at pre-determined exchange rate without bringing in a third benchmark currency like the US dollars.

While giving a push to the two local currencies, the swap deal would also reduce the transmission costs arising from exchange rate risks, it added.

The agreement was signed after the 12th India-UAE joint commission meeting co-chaired by India’s External Affairs minister, Sushma Swaraj and the UAE’s Foreign Minister, Sheikh Abdulla bin Zayed al Nahyan in Abu Dhabi.

Bilateral trade between the two countries stood at around $52 billion in 2017, according to figures from the Indian embassy in the UAE. In 2015, China’s central bank extended a currency swap agreement with the UAE Central bank worth $5.54 billion.

The second agreement would enable both sides to undertake development projects in Africa.

Later, an MEA official said the two leaders discussed several areas of mutual interests including defence, security, counter-terrorism, trade, economic, energy, science and technology, and civil aviation among others.

With nearly USD 50 billion bilateral trade, the two countries are one of the largest trade partners for each other and have made robust investments bilaterally. The UAE is the sixth-largest source of Indian oil imports and hosts a 3.3 million-strong Indian community.

Swaraj and Abdullah also jointly inaugurated a digital interactive museum showcasing the life, works and philosophy of Mahatma Gandhi and the founder of modern UAE Shaikh Zayed. The museum is expected to promote peace, tolerance and sustainability. The inaugration of the new museum is part of the celebrations by the two countries to mark 150th birth anniversary of Mahatma Gandhi and centenary celebrations of the birth of Shaikh Zayed.