Skip to main content

What is the India-US currency swap agreement?

The US Federal Reserve granted the currency swap line to RBI and other central banks. This will provide additional comfort in an event of any abrupt outflow of funds with predetermined terms and conditions.

The US Federal Reserve granted the currency swap line to RBI and other central banks. This will provide additional comfort in an event of any abrupt outflow of funds with predetermined terms and conditions. Earlier, the facility was limited to certain central banks of the world and did not include the Reserve Bank of India (RBI).

How will the currency swap agreement help India?

Amid the global pandemic, RBI expressed for a currency swap agreement with the US Federal Reserve as the pressure on Indian currency is increasing. The US Federal Reserve's grant will help India in stabilizing markets, reduce volatility and ease pressure on the Indian rupee.  
As per RBI, India's foreign exchange reserves have fallen by nearly $13 billion. On March 6, India has a foreign exchange reserve of $487.23 billion which fell to $474.66 billion on April 3.
On March 19, the US Federal Reserve announced the currency swap agreements with other central banks of the world to contain the risk of the shortage of dollars in global markets. However, at the time India was excluded from the list.
What happens in the currency swap agreement? 
In a currency swap agreement, the US Federal Reserve provides dollars to a foreign central bank which provides the same amount of funds in its currency. This swap is based on the market exchange rate at that time. The currencies can be swapped back later at a specified date agreed earlier with the same exchange rate when the first transaction was done. 
India already has a $75 billion bilateral currency swap line with Japan having the second-highest dollar reserves after China. Similarly, RBI also offers currency swap lines in the SAARC region within a total corpus of $2 billion.
The US Fed has permanent swap agreements with the several central banks of the world. However, economic like China, Saudi Arabia, etc. (G-20 group except for India) do not have currency swap lines with the US Fed. 
Labels:

Comments

Post a Comment

Popular posts from this blog

GK Questions and Answers: Geographical Indications (GI) Tags in India

A geographical indication (GI) is a name or sign used on certain products like agriculture, machinery products, and sweets, etc. which relates to a specific geographical location or origin (e.g., region, or country or a town). We have published a set of 10 important GK questions and answers on the Geographical Indications (GI) Tags in India. This set of 10 important GK questions and answers on the Geographical Indications (GI) Tags in India is very important for exams like UPSC/PSC/SSC/CDS etc. 1. Which was the first Indian product to get the geographical indication tag? (a).Aranmula Kannadi (b).Darjeeling Tea (c).Katarni Rice (d).Madhubani Paintings Answer:- b Explanation:-  Darjeeling Tea was the first Indian product to get the geographical indication tag in 2004.  2. How many products got GI tags till now? (a) 361 (b) 729 (c) 624 (d) None of the above Answer:- a Explanation:-  Till date 361 products have been issued GI tag. The latest recipient of the GI ta...
Post a Comment
Read more

List of Top investors in Reliance Jio

Reliance Jio the digital platform has sold around 25% stake to different investors to get rid of the debt of the company by March 2021. Facebook is the biggest investor that has purchased a 10% stake in the Jio Platform. The Reliance Industries Limited (RIL) was established by Ambani’s father, Dhirubhai Ambani in Maharashtra on 8 May 1973. Now Mukesh Ambani is the chairman and managing director of Reliance Industries Limited.  Mukesh is Asia’s richest and world 7th richest man. The RIL has sold 25% of the Jio Platforms stake to become a debt-free company by March 2021. At a time the company had a debt of Rs. 2.17 lakh crore but now it is having a debt of Rs. 21,900 crore. It is expected that the Jio might sell its stake to more companies like Google and other global giants. As of now the Reliance Jio the telecom and digital arm of RIL has raised $15.2 billion in 13 deals over two months. The Analysts predict the Jio could debut at a valuation of $100 billion within ...
Post a Comment
Read more

List of 14 famous Indian personalities who have tested positive for Coronavirus

The global pandemic has now infected 18,03,696 people in India and has so far claimed 38,135 lives, as per Ministry of Health and Family Welfare. In this article, we have listed famous Indian personalities who have been diagnosed with the virus. Amid the surging COVID-19 cases in India with a single-day spike of 52,972 positive cases and 771 deaths in the last 24 hours, India's COVID-19 tally has reached to 18,03,696 with 5,79,357 active COVID-9 cases and 38,135 deaths as per Ministry of Health and Family Welfare (at the time of writing this article). The deadly virus has not spared anyone-- rich, poor, aged, young, male, female, etc. Here's a list of famous Indians who have been diagnosed with COVID-19. 1- Amit Shah:  On August 2, 2020, Union Home Minister of India, Amit Shah, took to Twitter to reveal that he has tested positive for COVID-19 and is admitted in a hospital in Delhi.  2- SS Rajamouli:  On July 29, 2020, notable Indian filmmaker and his family have tested p...
Post a Comment
Read more