India is exploring possibilities of entering into currency swap agreements with trade partners aiming to shore up exports and bring down trade deficit, which is putting pressure on the rupee.
“A need arises to examine the issue of currency swap agreement and its impact on the Indian trade policy ... The matter is of particular interest to Ministry of Commerce,” a senior Government official said. Senior officials of Commerce and Finance ministries will discuss the issue later this month. The meeting, scheduled for August 20, will also be attended Reserve Bank officials.
India has signed currency swap agreements with Japan ($15 billion) and Bhutan ($100 million). China has shown active interest in entering into such an agreement with India but it is yet to be signed. The meeting is taking take place at a time when several countries are “actively engaged” in entering into currency swap agreements with their counterparts.