India, Japan sign $75 billion currency swap agreement
29 Oct 2018
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India and Japan have signed a bilateral currency swap agreement for up to $75 billion during Prime Minister Narendra Modi’s visit to Tokyo. The agreement would help bring greater stability to foreign exchange and capital markets in India, according to an official statement.
The swap arrangement will help bring greater stability to foreign exchange and capital markets in India. This arrangement would also further help India tap foreign capital for the country's development needs.
This facility will enable the agreed amount of foreign capital being available to India for use as and when the need arises.
The new agreement, which represents a fifty per cent increase over the previous currency swap arrangement between the two countries, is indicative of the close bonds between the two countries nurtured by the two leaders, the two prime ministers said.
Prime Minister of Japan Shinzo Abe is reported to have said that he is friend of India forever.
To encourage investment in infrastructure, RBI will address the resolution on hedging requirement.
Strengthening of dollar has resulted in flight of capital from emerging markets, especially India in recent months. This has forced governments and central banks of emerging economies to take various policy measures to improve the availability of foreign capital.
India on its part has taken various steps towards containing the current account deficit (CAD) and rupee volatility, which include relaxations in norms for external borrowings and issuance of offshore rupee bonds (Masala Bonds), review of certain restrictions on FPI investment in debt, hike in customs duty for curtailing imports of non-essential items, steps for promoting exports, financing standing working capital of oil marketing companies by long term external borrowings etc.
