Japan Prime Minister, Shinzo Abe and Indian Prime Minister, Narendra Modi met in Japan on Monday in a 2+2 dialogue. The meeting led to the signing of a new currency swap deal valued at $75bn, aimed at helping foreign exchange in capital markets.
The deal will also advance economic cooperation between the two countries through deepening and diversifying the type of trade they engage in. This is the third currency swap deal between the two countries with the first in 2008 and the second taking place in 2013.
The swap deal opens up flexibility for India to gain access to foreign capital when the need arise, it also supports the Indian rupee and foreign exchange reserves. The deal also allows India to attain dollars from Japan when needed.
The swap deal also means the easing of regulations regarding foreign borrowing and review of regulations on foreign portfolio investments in debt. It will further reduce raised customs duty to curtail imports of non-essential items and allow oil marketing companies to fund standing working capital through long-term external borrowings.