Mumbai, June 30 (UNI) In a milestone arrangement in mutual cooperation between Japan and India, that aims to contribute to the stability of financial markets, the Bank of Japan (BOJ), acting as the agent for the Minister of Finance of Japan, and the Reserve Bank of India (RBI) concluded a Bilateral Swap Arrangement (BSA).
The BSA was signed by Governor Masaaki Shirakawa of the BOJ and Governor Yaga Venugopal Reddy of the RBI in Basel, Switzerland and became effective yesterday, RBI said in a release here today.
The BSA enables both countries to swap their local currencies (either Japanese yen or Indian rupee) against US dollar for an amount of up to USD three billion.
The arrangement aims to address short-term liquidity difficulties and supplement the existing international financial arrangements, as one of the efforts in strengthening mutual co-operation between Japan and India.
The BSA would be activated when an IMF-support programme already exists or was expected to be established in the near future.
Nevertheless, up to 20 per cent of the maximum amount of drawing could be disbursed without an IMF-support program.
Both countries shall have biannual consultations on economic and financial conditions of each country, with the BSA in effect.
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