Commerce Minister says task force will be formed to expedite swap arrangements
The Government is looking at currency swaps as an option for conducting trade with its major partners as the rupee continued to slide against the US dollar, touching a new low on Tuesday.
“We need to look very seriously at getting into currency swaps with some countries. I want the wisdom of our bankers, export promotion council and industry leaders to guide us,” Anand Sharma, Minister for Commerce and Industry, said at a meeting of the Board of Trade, here.
India could consider carrying out currency swaps with the “big” four trading partner countries and a task force would be formed to expedite the process. India is already trading in rupees with Iran.
The task force, which will have representatives from the Finance Ministry, banks, exporters community and the Commerce Ministry, will have to submit its report within four weeks, said Sharma.
The Government is hopeful that a currency swap arrangement would help stabilise the rupee against the dollar as demand for the appreciating currency goes down.
The matter will be discussed with the Revenue Department, Sharma added. While the Minister did not elaborate on the countries being considered, industry representatives said significant trading partners such as China, the EU and Iraq could be the options.
During the Iraqi Prime Minister’s recent visit to India, the two sides talked about the possibility of trading in oil in the local currency. Iraq has emerged as the second largest supplier of oil since last year following economic sanctions imposed on Iran by the US and the EU.
Sharma also spoke about the possibility of using a part of the country’s large gold holdings to bridge the current account deficit.
“There is a large amount of gold holdings in India. It is up to the RBI to think of how to monetise it. Even if a small fraction, say 500 tonnes, of the holding is monetised, it could take care of the deficit,” he added.
The Government is also banking on higher exports to reduce the current account deficit. While exports registered an 11.6 per cent growth in July 2013 after two months of continuous fall, prominent sectors such as engineering goods are yet to register growth.
The BOT, comprising representatives of industry and Government, considered further measures to increase exports from the country.