India, Japan Ink 6 Pacts, Agree on Currency Swap Arrangements.

In major development from India-Japan annual summit, Tokyo has come to New Delhi’s rescue to stabilise the rupee at a time when India is facing an imminent financial crisis with the Indian currency reaching a record low.

Both countries reached an arrangement ‘Indo- Japanese Agreements for Bilateral Currency Swap Arrangement of Seventy-Five Billion dollars’ to allow trade in local currencies rather than in dollars.

Hailing this as the “high point” of economic and financial agreements between the two countries, statement by the Ministry of External Affairs (MEA) said, “The swap arrangement should aid in bringing greater stability to foreign exchange and capital markets in India. With this arrangement in place, prospects of India would further improve in tapping foreign capital for country’s developmental needs”,

In addition, both sides also agreed to work with Yen Loans to India for the Project for the Construction of Mumbai-Ahmedabad High-Speed Rail (II) and 6 Others’ to allow trade in local currencies rather than using US dollars. Experts believe that this is a way to stabilise the INR (Indian National Rupee).

“Essentially, its the amount of currency exchanged between the two countries at prevailing exchange rates. It’s to allow trade between the 2 can happen in the two currencies and to ensure you don’t need a 3rd currency like $ to trade between the two countries. This will stabilise the Rupee as well as Yen against USD”, said Rajeev Dubey, Managing Editor, Business Today.

“Today’s decision of entering into currency swap agreement is another important measure towards improving confidence in the Indian market. This facility will not only enable the agreed amount of Capital being available to India on tap for use, it would also help in bringing down the cost of capital for Indian entities while accessing foreign capital market”, said the MEA statement.

The envoys of both the nations “exchanged notes concerning the provision of yen loan related to seven projects including the Project for the Construction of Mumbai-Ahmedabad High Speed Rail (II) (total loan provision of up to 316.458 billion yen, approximately INR 20,674.201 crore)”, said a statement.

While India focussed on how to bring normalcy in the erratic markets and unstable Indian economy, both sides also made some important announcements on the defence and strategic front.

The two Prime Ministers “reaffirmed” their desire to further deepen bilateral security and defence cooperation by instituting the ‘2+2’ foreign and defence ministerial dialogue similar to the one that was held recently between INdia and the United States of America. India also has a similar dialogue with Australia at the Joint Secretary-level.

“We have agreed for a 2+2 dialogue between our Foreign Ministers & Defence Ministers. The aim of this is to further work towards world peace & stability”, said PM Modi during the joint press statement.

Keeping maritime security cooperation in mind, both sides reiterated commitment to the “bilateral” naval exercises and and the two sides also said, “they will continue to make efforts with regard to cooperation on US-2 amphibian aircraft.”

Source:IT

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