What Is Currency Swap Agreement Between India And Japan

December 21st, 2020 3:47 am

In the past, Japan has also signed currency exchange agreements with China, Malaysia, Singapore, Indonesia and Thailand. In addition to monetary or exchange rate stability, exchange swaps between governments also pursue additional objectives such as promoting bilateral trade, maintaining the value of foreign exchange reserves with the Central Bank and guaranteeing financial stability (protecting the health of the banking system). Currency swea with Japan will help India pacify the depreciated trend of rupees. In the future, the RBI will be able to execute swap rupees against dollars to ensure exchange rate stability. During his recent visit to Japan, Prime Minister Narendra Modi reached an agreement for a bilateral agreement on currency sweats exchanges, in addition to discussing ball trains and yen loans with his Japanese counterpart. Although India has such agreements with many Asian nations, it is one of the largest of these agreements, which are valued at $75 billion. The government hopes the agreement will serve as a buffer to support the rupees, which have depreciated by 14% against the dollar this year. Currency swap agreements can be bilateral or multilateral. The first swea, signed on February 28, 1962, took place between the U.S.

Federal Reserve and the French Central Bank. But we also need something for Japan. Currency exchange will boost trade between India and Japan. It also has political consequences. Japan has bought India`s goodwill and will await its support in international forums. But what`s in it for Japan? Well, Japan might see this agreement as a counterpart for lucrative investments that help Japanese companies get into India. India and Japan signed a currency exchange agreement during Prime Minister Modi`s visit to Japan on October 28, 2018. The currency exchange agreement is worth $75 billion and is a great opportunity for India to obtain foreign currency by trading rupees in Japan. At a time when rupees were depreciating by more than 13% against the dollar (so far), India and Japan yesterday concluded one of the largest bilateral currency exchange agreements in the world.

This will not only strengthen bilateral financial cooperation between the two countries, but also stabilize the rupees and reduce the current account deficit (CA). India and Japan have also signed similar agreements in the past, but this is the largest bilateral agreement of its kind in the world. The bilateral currency exchange agreement will also increase India`s foreign exchange reserves (FOREX). India`s FOREX reserves have fallen since the peak of $426.08 billion in April 2018. This is because the RBI has sold reserves of U.S. dollars to limit the depreciation of rupees. With the Swea-exchange agreement, India will have an additional $75 billion in foreign capital whenever it takes. It will reduce the costs of accessing foreign capital. Update on 14.04.2020: India is discussing a bilateral sweatshirt line with the United States. The Indian currency is still overvalued and is expected to depreciate further, so a fixed exchange rate will benefit India and reduce THE risks associated with FOREX. “In order to improve financial and economic cooperation, the Japanese and Indian governments welcomed the agreement to conclude a $75 billion bilateral swap agreement (BSA,”” the India-Japan vision statement said.

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