India, Japan to exchange currencies up to $75B—Why it matters
What's the story
The Reserve Bank of India (RBI) has announced the renewal of a $75 billion bilateral currency swap agreement with Japan. The Bilateral Swap Arrangement (BSA)—which allows both countries to exchange their local currencies for US dollars—was signed by the RBI and the Bank of Japan. The renewed BSA came into effect on today and provides liquidity and stability in times of global economic volatility.
Information
Official statement from the RBI
"The Bank of Japan, acting as agent for the Minister of Finance of Japan, and the Reserve Bank of India signed the Second Amendment and Restatement Agreement of the BSA," the central bank said in a notification.
Financial stability
BSA renewal aims to strengthen financial safety nets
The RBI said the size of the BSA remains unchanged at up to $75 billion. The central bank also expressed confidence that this arrangement, which is designed to strengthen and supplement other financial safety nets, will further enhance financial cooperation between India and Japan. It provides a buffer against external shocks and supports the smooth functioning of bilateral economic relations.