Currency swap deal

Mumbai, Dec. 4: The Reserve Bank of India today entered into a currency swap agreement with the Bank of Japan for up to $15 billion.

Under the deal, the central banks of both countries can swap their currencies for the US dollar from their foreign exchange reserves, thereby strengthening the local units.

Both the central banks had a similar agreement of up to $3 billion for a period of three years to June 2011.

In a press statement today, the RBI said the arrangement aimed at addressing short-term liquidity difficulties and supplementing the existing international financial arrangements. It will also strengthen mutual co-operation between the two countries.

The Bilateral Swap Arrangement was signed by Bank of Japan governor Masaaki Shirakawa and RBI governor Duvvuri Subbarao. It will take effect from today.