The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has given its ex-post facto approval for the Memorandum of Understanding (MoU) signed in February, 2016 between Reserve Bank of India (RBI) and Central Bank of United Arab Emirates (UAE) on co-operation concerning currency swap agreement.

The MoU commits that RBI and Central Bank of UAE will consider signing a bilateral Currency Swap Agreement on mutually agreed terms and conditions, after undertaking technical deliberations, subject to the concurrence of respective Governments.

The MoU will further strengthen the close economic relationship and cooperation between India and United Arab Emirates. The swap agreement is also expected to facilitate invoicing of bilateral trade in local currencies

Currency swap cooperation enables local currency trade invoicing and anticipates a formal swap agreement pending technical deliberations and government concurrence. The memorandum commits the central banks to consider a Currency Swap Agreement on mutually agreed terms after technical deliberations and subject to government concurrence, aiming to facilitate local currency invoicing for bilateral trade and strengthen economic cooperation; it is a framework for negotiation rather than a definitive swap contract.