India and Japan are negotiating a new $10-billion currency swap arrangement ahead of a planned visit to India by Japanese Prime Minister Yoshihiko Noda this week, a foreign ministry official said today.
Noda, who will arrive in Delhi on Wednesday on a three-day visit, is expected to signal an across-the-board increase in Japanese investments in India and sign an agreement on a $10 billion currency swap facility.
India had, in 2008, arranged a $3-billion currency swap arrangement with Japan that expired in June. The new one could be worth around $10 billion, according to the Nikkei business newspaper.
"I think this will be a subject that will be discussed between the two prime ministers at the summit," Gautam Bambawale, joint secretary (East Asia) in the external affairs ministry, said.
Japan is sitting on a $1.3-trillion foreign currency reserve as of November 2011, and a swap arrangement could help India support the rupee, Asia's worst performing currency.
Bambawale said the details of the arrangement are with the finance ministries and prime ministers of the two countries.