India and Japan sign US$15bn currency swap deal

India and Japan have agreed on a US$15bn (~ Rs. 800bn) currency swap deal to tide over the ongoing shortage of the US dollar amid mounting concern about the eurozone sovereign debt crisis. The new currency swap arrangement with Japan will also help India support its tumbling currency. The rupee has lost ~15% this year as investors continued to be risk averse on worries about slowing domestic growth and widening deficits. Japanese Prime Minister Yoshihiko Noda renewed a bilateral swap agreement with Indian Prime Minister Dr. Manmohan Singh in New Delhi today. The two nations had signed a US$3bn accord in June 2008 that has since expired. Japan already has currency-swap accords with other Asian peers like China, South Korea Indonesia and the Philippines. Just recently, Japan clinched a deal with China to expand use of the yuan and yen in bilateral trade and purchase Chinese bonds. Reserves in Japan surged to US$1.22 trillion in November from US$1.04 trillion at the end of last year, helped in part by a resumption of currency intervention. Japanese premier Noda urged India and Japan to work towards closer ties between the two nations for better economic, political and regional cooperation.