India signs $75 bn currency swap agreement with Japan

The Government of India (GoI) has recently signed $75 bn bilateral currency swap agreement with Japan to bring greater stability in foreign exchange and capital markets in the country. The currency swap pact would enable the two major Asian economies to swap their local currencies – either Indian rupee or the Japanese yen against the US$ up to 75 billion. It will be used only when required, and will help meet short-term liquidity mismatches. The facility will also help in bringing down the cost of capital for Indian entities while accessing foreign capital market. The facility is entered between the central banks of both the countries. However, this is not the first time there has been such an offer from Japan. Japan had offered a $50 billion currency swap in 2013 as well and even before that, one for $3 billion in 2008.