India and the Maldives on Monday signed a currency swap agreement for $400 million as part of the $1.4 billion economic package announced last year.

“India & Maldives signed Currency Swap Agreement for $400 million today as part of the $1.4 billion economic package announced in December 2018. Signing took place in Malè by Gov MMA and Exec Dir RBI,” the Indian Embassy in Male tweeted.

The package was announced during the visit of Maldivian President Ibrahim Mohamed Solih in December 2018. The swap will allow the countries to exchange currencies with pre-determined terms and conditions. The aim of the accord is to avoid risks in foreign exchange market and exchange rate.

As part of the package, India will provide the cash in the form of budgetary support, currency swap, and concessional lines of credit to fulfill the Maldives’ socio-economic development programmes.

India and the Maldives signed four agreements during Solih’s visit last year. One was an agreement on the facilitation of visa arrangements which will ease the issuance of visas for the people of both countries.

Prime Minister Narendra Modi had noted that the new agreement would address common concerns and ensure that people-to-people contacts were enhanced. President Solih said the agreement would enable many Maldivians who send their children to school in India to accompany them. The agreement also facilitates easier visa arrangements for Maldivian citizens and their families to come to India for medical treatment.

The Maldives is one of the very few countries with which India has a visa-free arrangement.