India has extended a $150 million foreign currency swap support to The Maldives on Tuesday to help the strategically crucial island nation cope with COVID-19. The $400 million currency swap arrangement was signed between the two countries in July 2019.
“A foreign currency swap facility of $150 million will be given to the Maldives Monetary Authority under the $400 million currency swap agreement signed in July 2019 between the two countries,” a statement issued by the Indian embassy in Male reads.
The decision to activate the currency swap arrangement comes a week after the telephone conversation between President Ibrahim Mohamed Solih and Indian Prime Minister Narendra Modi whereupon India reiterated “its commitment to stand by The Maldives in these challenging times”.
The development holds importance as the Chinese ambassador to the islands also promised some announcement in coming days after Beijing started building a housing project for COVID-19 affected people.
China announced on Monday that it had decided to send over 100 workers, along with equipment and material, to build temporary quarantine facilities to house a maximum 800 persons in The Maldives.
China and India have been vying for influence in The Maldives for years, and with the arrival of the Solih government last year, New Delhi managed to curb the influence of Beijing, which had grabbed several infrastructure projects during the last government.
China approved loans to Male for several infrastructure projects under the previous government led by Abdullh Yameen, including funding housing projects, a bridge connecting the airport island with the capital island, Male, and some state-owned enterprises. However, under the Solih government, China received several setbacks including the halting of the proposed Free Trade Agreement between the two countries.
The Republic of Maldives is barely 70 nautical miles away from Minicoy Island in Lakshdweep, and 300 nautical miles away from India’s West coast.
The Maldives' location is at the hub of commercial sea-lanes running through Indian Ocean, and its potential to allow a third nation’s naval presence in the area makes it strategically importance for India.