The Hindu Business Line : India-Japan swap deal on cards

Mumbai, Aug. 14 India and Japan will help each other if their currencies were to come under the attack of speculators.Both countries will soon sign an agreement to swap foreign currencies like US dollar or euro to maintain the value of rupee and yen in foreign exchange markets.Details of the agreement, such as the quantum of foreign exchange that would be used is not yet known. The RBI confirmed today that an agreement is on the cards . A RBI spokesperson said theinformation is available at the Web site of Bank of Japan. However, this could not be verified. The Reserve Bank of India, and Bank of Japan (BoJ) would be the nodal agencies going by such agreements that Japan has entered into with other countries.

According to information available on the BoJ’s website, Japan has swap deals withother Asian countries like Thailand, Korea, China, Malaysia, Philippines, Singapore and Indonesia. In some cases the swap is one way, while in some cases it is a two-way.

The latest agreement was between Japan and Thailand, in July, under which Thailand can swap up to US $6 billion while Japan can swap up to US $3 billion in case there is need for short-term liquidity.

The Japanese Prime Minister, Mr Shinzo Abe is expected to finalise the agreement with the Prime Minister, Dr Manmohan Singh, during his visit to India next week. Japanese newspaper, The Ashai Shimbun, reported news of the agreement on Tuesday.

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