world-news

India, Japan expand currency swap pact to USD 50 bn

By Arvind Padmanabhan, St. Petersburg, Sep 6 : India and Japan have decided to expand their currency swap agreement, a financial tool to help cushion volatility in foreign exchange markets, to USD 50 billion from USD 15 billion, it was announced here Friday.


The decision was conveyed following a meeting between Prime Minister Manmohan Singh and Japanese Deputy Prime Minister and Finance Minister Taro Aso on the sidelines of the G20 Summit here.

"The two governments expect that this (expanded currency swap) will contribute to the stability of global financial markets, including emerging economies," a joint statement issued by the two sides said.

"The two governments also reiterated the importance of continued reforms in financial and investment sectors for promoting stable and long term capital inflows into India. The two governments believe that these policy measures will strengthen the bilateral financial cooperation between Japan and India."

Under swap arrangements, two entities -- companies or governments -- agree to exchange one currency for another at a predetermined rate and interest.

The advantage of such pacts is that they eliminate the risk that the future exchange rate will change in a way that puts one party or the other at a disadvantage.

Briefing journalists later, India's Department of Economic Affairs Secretary Arvind Mayaram said this pact will go a long way in addressing volatility in currency markets.

"The problem today is of not reality but of perception. It is clear, neither Japan will need this (money available) nor will we," he said, alluding the pact will notionally shore up India's foreign exchange reserves, currently at around USD 280 billion, and provide a cushion of perception.

"On our part, we are committed to reducing the current account deficit to 3.7 percent. But markets tend to have a fear of the unknown. Agreements like these will shore up confidence and sentiments," he said.

(Arvind Padmanabhan can be reached at arvind.p@ians.in)

--IANS (Posted on 07-09-2013)

world-news headlines

Strong earthquake hits Mexico

''Hardline Pak' Lal Masjid names library after Osama bin Laden

Meet Parrot that drinks beer and headbangs to music

Cardiff University scientists make major breakthrough in Leukaemia treatment

Mata backs Moyes to reverse United's fortunes with new signings this summer

'Deeply ashamed' S. Korean ferry captain first one to abandon ship

Terry offered new one-year contract at Chelsea with massive pay-cut

Young Christian women facing greater risk of kidnappings, tortures in Egypt

Putin tells Snowden Russia doesn't spy like NSA

Now, try 'dummy' Google Glass sets for free in your home

Leading US art store admits 2.6 mln credit cards at risk of hacking

David Cameron 'stung by jellyfish' during Spanish holiday

Quick Links: Goa | Munnar | Pondicherry | Free Yearly Horoscope '2014

Comments

Your e-mail:


Your Full Name:


Type verification image:
verification image, type it in the box

Message:

Back to Top