India, Japan sign $75-billion pact on currency swap

NEW DELHI: India and Japan concluded a $75 billion bilateral currency swap agreement on Monday, with New Delhi saying the measure will improve confidence and stability in the foreign exchange and capital markets.

The decision on the pact was made during Prime Minister Narendra Modi’s annual summit with his Japanese counterpart Shinzo Abe in Tokyo.

The agreement will also strengthen and widen the diversity of economic cooperation, the Indian government said.

During Abe’s visit to China last week – the first by a Japanese premier since 2011 – the two sides concluded a currency swap agreement for 200 billion yuan (almost $29 billion) on Friday after a gap of five years.

The new agreements by Japan reflect efforts to counter growing uncertainty in global markets, largely due to unilateral actions by the Trump administration and the trade war between the US and China. Modi, who was on a twoday visit to Japan, and Abe held wide-ranging talks during which they agreed to deepen economic and security cooperation, including the start of a 2+2 dialogue between the defence and foreign ministers. “With a view to enhancing financial and economic cooperation, governments of Japan and India welcomed the agreement to conclude a Bilateral Swap Arrangement (BSA) of $75 billion,” said the vision statement issued after the summit. The currency swap arrangement was described by India’s finance min- istry as a “high point” of economic and financial pacts with Japan. It represented an increase of 50% over the last bilateral currency swap pact, signed in 2014 and effective till December 2015.

The agreement, the finance ministry said, should “aid in bringing greater stability.”