India’s Currency Swap Agreements: A Comprehensive Overview
India is one of the fastest-growing economies in the world, with a GDP growth rate of 7.4% in 2019. To support this growth, the country has entered into currency swap agreements with several countries over the years. Currency swap agreements allow two countries to exchange their currencies for a specified period of time and at a pre-determined exchange rate.
Let`s take a closer look at India`s currency swap agreements and the countries involved.
The most recent currency swap agreement was signed in 2020 between India and Sri Lanka. Under this agreement, the Reserve Bank of India (RBI) will provide a currency swap facility of USD 400 million to the Central Bank of Sri Lanka.
India also has a currency swap agreement with the United States, which was signed in 2019. The agreement allows the RBI to draw up to USD 6 billion in US dollars from the US Federal Reserve. This agreement helps India maintain financial stability in case of any fluctuations in the US dollar.
Another notable currency swap agreement is with Japan. In 2019, the two countries signed a currency swap agreement for a total value of USD 75 billion. Japan is one of India`s top trading partners, and this agreement is expected to facilitate trade between the two countries.
India has a currency swap agreement with the United Arab Emirates (UAE) as well. This agreement was signed in 2015 and allows the RBI to draw up to USD 2 billion in UAE dirhams.
China is also among the countries that have signed a currency swap agreement with India. In 2013, the two countries signed an agreement for a total value of USD 30 billion. This agreement helps promote trade and investment between the two countries and is seen as a significant milestone in their relationship.
Apart from these countries, India also has currency swap agreements with several other countries, including Nepal, Bhutan, and Maldives.
In conclusion, currency swap agreements have become an important tool for countries to maintain financial stability and promote international trade. India`s currency swap agreements with various countries have helped to facilitate trade and investment, and these agreements are expected to play an essential role in India`s economic growth in the future.