India, Japan ink $75-bn currency swap agreement

India and Japan on Monday concluded one of the largest bilateral currency swap agreements at $75 billion that will help in bringing greater stability in foreign exchange and capital markets in the country.

The agreement will further strengthen and widen the depth and diversity of economic cooperation between the two nations. "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 India-Japan Vision Statement.

The statement was released after India-Japan Annual Summit between Prime Minister Narendra Modi and his Japanese counterpart Shinzo Abe in Tokyo.

Commenting on the development, Economic Affairs Secretary S C Garg said in a tweet: "Bilateral swap arrangement with Japan for $75 billion is one of the largest swap arrangements in the world.

"Accepting Japanese request, India agreed to do away with requirement of mandatory hedging for infrastructure ECBs of 5 years or more minimum average maturity".

The finance ministry said the currency swap agreement should "aid in bringing greater stability to foreign exchange and capital markets in India...This facility will enable the agreed amount of foreign capital being available to India for use as and when need arises".

The facility will also help in bringing down the cost of capital for Indian entities while accessing foreign capital market, it added.

Modi and Abe reviewed the significant milestones achieved over the last four years and outlined a shared vision for the future of India-Japan relations.

The two leaders remain committed to synergising India's demographic dividend and Japan's capital and technology to realise the true potential of the India-Japan economic partnership for a prosperous future.