The Reserve Bank of India (RBI) and the Bank of Japan (BoJ) have concluded a three-year Bilateral Swap Arrangement (BSA) between India and Japan.

The BSA, which was signed by RBI Governor D. Subbarao and BoJ Governor Masaaki Shirakawa, has become effective as of December 4, 2012.

The arrangement aims at addressing short-term liquidity difficulties and supplementing the existing international financial arrangements, as one of the efforts in strengthening mutual cooperation between Japan and India.

The BSA will enable both countries to swap their local currencies (i.e., either Japanese yen or Indian rupee) against US dollar for an amount up to $15 billion.

In the past, both the countries had a similar arrangement for an amount up to $3 billion for a period of three years from June 2008 to June 2011.

The enhancement of the BSA will further strengthen economic and financial cooperation between the two countries and accordingly contribute to ensuring financial market stability, said an RBI statement.

(This article was published on December 4, 2012)
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