Prime Minister Nawaz Sharif today said that Pakistan was examining the possibility of having a currency swap agreement with Sri Lanka, almost an year after India announced a similar deal with the island nation.

Sharif, who was on a three-day visit to Sri Lanka, said the two countries were working towards expanding bilateral trade to US $ 1 billion from the present US $ 325 million.

"The understandings we have reached today should bring new vigour and vitality to our relations," he said at the launch of a trade show organised by Pakistan in Sri Lanka.

Sri Lanka and Pakistan have also agreed to broaden their free trade deal to include investments and services sectors, while forming a joint stock company.

"We are also examining the possibility of setting up a joint investment company and having a currency-swap with Sri Lanka," Sharif said.

"We have agreed to include investments and services sectors in our bilateral free trade agreement," Sharif said today. "This marks a significant step in our relationship and should help expand our bilateral trade to new heights and create more jobs for the younger generation."

He said over 100 Pakistani firms, including those involved in automobiles, food and beverages and pharmaceuticals, will take part in a trade exhibition between January 15 and 17.

His remarks came about an year after the Reserve Bank of India (RBI) in March agreed for a US $ 1.5 billion currency swap agreement with the Sri Lankan Central Bank to help the island nation keep its currency stable.

In July, the RBI said the special pact will allow Colombo to draw up to US $ 1.1 billion for up to six months. Despite attempts by the Central Bank, the Lankan rupee has been under pressure for quite some time.

Islamabad and Colombo grew closer during Lanka's civil war by supplying arms to fight Liberation Tigers of Tamil Eelam, who sought an independent state for the ethnic minority.

Yesterday, the two nations signed eight agreements to boost cooperation in areas like trade promotion, and science and technology besides combating money laundering and terror financing.

His trip comes eight months after Sri Lankan President Maithripala Sirisena's visit to Pakistan in April last year.

(Outlook)