India Japan Currency Swap Agreement

India Japan Currency Swap Agreement

Question: Consider the following statements and choose the correct option in reference to the Currency Swap Agreement between India and Japan.
1) The Union Cabinet under PM Narendra Modi approved the Currency Swap Agreement.
2) The agreement will be signed among Finance Ministry of both the nations.
3) The maximum amount decided for the agreement is USD 75 billion.
4) It also granted setup of an advance single window to boost bilateral investments.
Correct option:

(a) 1, 3 and 4
(b) 1, 2 and 3
(c) 1 and 4
(d) 2 and 4
Answer: (a)
Related facts:

  • The Union Cabinet under Prime Minister Narendra Modi approved the proposal of Agreement for Bilateral Swap Arrangement between India and Japan. This authorized The Reserve Bank of India and Bank of Japan to enter into agreement.
  • Agreement highlights:
  • This arrangement will facilitate exchange and re-exchange of a maximum amount of $ 75 billion for domestic currency for the purpose of maintaining an appropriate level of balance of payments for meeting short-term deficiency in foreign exchange.
  • The Agreement will ease India in paying for the imports and address the issue of depreciation and stabilizing the Balance of Payments. Japan is one of the biggest Asian countries India trade with.
  • Currency Swap Agreement is a foreign exchange agreement for a given amount of currency for another between two parties for a specific period of time which is to be returned back afterwards. This promotes the economic cooperation and helps in mutual trade between nations using local currencies.
  • Advanced Single Model Window:
  • The cabinet also approved a MoU (Memorandum of Understanding) between both nations for developing an Advanced Model Single Window and its operationalization in Central and State governments in India for taking necessary administrative procedures for business operations.
  • The Advanced Model Single Window will have best practice in and outside India. This will promote efficiency in the business clearance in India and would promote the ease of doing business operations.

Links:
http://www.pmindia.gov.in/en/news_updates/cabinet-approves-mou-on-maritime-issues-between-india-and-denmark/?comment=disable
https://www.business-standard.com/article/news-ians/cabinet-okays-75-bln-currency-swap-deal-with-japan-119011001416_1.html