The Reserve Bank of India - RBI today signed the first Currency Swap Agreement with the Royal Monetary Authority of Bhutan. 

A notification issued by RBI said the Royal Monetary Authority of Bhutan can draw US Dollar, Euro or Indian Rupee in multiple tranches up to a maximum of 100 million US dollars or its equivalent. 

The agreement will be valid for a period of three years. The agreement signed by RBI with Royal Monetary Authority of Bhutan is expected to further economic co-operation between the two countries.

During the SAARC FINANCE meeting last year, RBI Governor Dr. D. Subbarao had announced that RBI would offer swap facilities aggregating 2 billion US dollars, both in foreign currency and Indian rupee to SAARC countries. 

The swap arrangement is intended to provide a backstop line of funding for the SAARC member countries to meet any balance of payments and liquidity crises till longer term arrangements are made. 

The agreement can also be used to tide over short-term liquidity crunch due to market turbulence. The arrangement would also further financial stability in the region.