India is one of the largest economies in the world and has been quite active in forging economic alliances with other countries. One such economic pact that the country has entered into with several nations is currency swap agreements. Currency swap agreements are bilateral arrangements between two countries to exchange their currencies at pre-determined rates for a specific period of time. These agreements promote trade and investment between the two countries, facilitate cross-border transactions, and provide a cushion against currency fluctuations.
India has signed currency swap agreements with several countries over the years. Let`s take a closer look at some of them.
1. Japan: Japan is India`s largest bilateral donor and has been a significant investor in the country over the years. In 2013, the two countries signed a currency swap agreement worth $15 billion, which has since been increased to $50 billion. The pact allows the two countries to swap their currencies to fund their respective trade and investment needs.
2. Sri Lanka: India has a currency swap arrangement with Sri Lanka, which was signed in 2015. Under this agreement, India would provide Sri Lanka with a $400 million swap facility, which would help the country manage its short-term currency needs.
3. UAE: India and the United Arab Emirates (UAE) signed a currency swap agreement worth $75 billion in 2018, making it one of the largest swap pacts between the two countries. The agreement would enable both countries to trade in their own currencies, rather than relying on the US dollar.
4. Bhutan: India and Bhutan have been close allies for several decades, and in 2019, they signed a currency swap agreement worth $100 million. The pact facilitated the settlement of transactions in local currencies and reduced Bhutan`s dependence on the Indian rupee.
5. Nepal: India has signed a currency swap agreement worth $1.5 billion with Nepal to help the landlocked country manage its currency requirements. The agreement was signed in 2019 and would be valid for five years.
In conclusion, India has signed currency swap agreements with several countries, including Japan, Sri Lanka, UAE, Bhutan, and Nepal. These agreements have helped promote trade, investment, and cross-border transactions between the countries, and have cushioned them against currency fluctuations. With India`s growing economic stature, it is likely that more countries will seek to enter into currency swap agreements with it in the future.
