India and the United Arab Emirates on Tuesday signed a currency swap agreement to boost investment and enable direct trade without using dollars or other international currencies.
The swap is for 200 crore dirhams or Rs 3,500 crore ($496 million), depending on which central bank requests the amount, an official statement said.
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"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.
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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 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.
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