Japan’s Prime Minister Shinzo Abe, left, escorts India’s Prime Minister Narendra Modi while reviewing an honor guard ahead of a meeting at Abe’s official residence in Tokyo on Monday. (Photo: AP/PTI)

India Signs Currency Swap Pact With Japan To Stabilise Rupee

The Indian government signed a $75-billion currency swap agreement with Japan to stabilise foreign exchange and capital markets.

The deal will help the two countries to swap their currencies for U.S. dollars to stabilise the rupee which has witnessed the steepest fall in recent years. The agreement, according to a statement from the Ministry of Finance, will allow India to tap foreign capital as and when the need arises, and help to bring down the cost of funds for Indian companies while accessing the foreign capital market.

“The currency swap agreement will have a positive impact on financing India’s current account deficit,” Shaktikanta Das, member of 15th Finance Commission and former economic affairs secretary, tweeted.

This comes against the backdrop of a gradual increase in interest rates in the U.S. that has led to the strengthening of the greenback against other currencies, and flight of capital from emerging economies.

The agreement was signed between Indian Prime Minister Narendra Modi and his Japanese counterpart Shinzo Abe. New Delhi said the value of the deal is 50 percent higher than the last currency swap between the two countries.

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