(ET)
Japan and India entered into a $75-billion currency swap arrangement that will bolster the country’s firepower as it battles a steep drop in the rupee’s value. An agreement to this effect was signed during Prime Minister Narendra Modi’s ongoing visit to Japan. “India and Japan agreed to enter into a bilateral swap arrangement of $75 billion. This swap arrangement would be 50% higher than our last swap agreement,” finance minister Arun Jaitley tweeted. Japan had offered a $50 billion currency swap in 2013 and, before that, one for $3 billion in 2008.
“This facility will enable the agreed amount of foreign capital being available to India for use as and when the need arises,” a government official said. “This New Swap Agreement should aid in bringing greater stability to foreign exchange & capital markets in India,” the finance ministry said in a tweet. The facility will serve as a second line of defence for the rupee after the $393.5 billion of foreign exchange reserves that the Reserve Bank of India (RBI) has at its disposal. Under the arrangement, India can acquire dollars from Japan in exchange for rupees.
