Reserve Bank of India (RBI) signed Currency Swap Agreement with Bank of Japan

The Reserve Bank of India on 4 December 2012 signed a three year Bilateral Swap Arrangement (BSA) with the Bank of Japan for swapping of the local currencies to address short-term liquidity problems. The BSA will be effective from 5 December 2012.

The main idea behind the arrangement is to address short-term liquidity difficulties and supplement the existing international financial arrangements, as one of the efforts in strengthening mutual cooperation between Japan and India.

The Bilateral Swap Agreement (BSA) is going to enable both the countries to swap their local currencies either Japanese yen or Indian rupee against US dollar for an amount up to 15 billion dollars.

Earlier for a period of three years from June 2008 to June 2011 both the countries signed a similar agreement for an amount of 3 billion dollar.

The enhancement of the BSA is going to strengthen economic and financial cooperation between the two countries and accordingly to financial market stability. The BSA is activated when an IMF-support programme already exists or is expected to be established in the near future.