Bilateral Swap Agreement

Question 1

Recently Union Govt approved the proposal of entering into a Bilateral Swap Agreement(BSA) of max amount of USD 75 million with which country ?

Answer 1

JAPAN

Question 2

What does BSA between India and Japan signify ?

Answer 2

Mutual cooperation between the 2 nations for helping each other in times of difficulty and restoring intl confidence

Question 3

How will it enhance RBI’s autonomy ?

Answer 3

It enhances RBI’s capabiltiy to manage exchange rate volatility

Question 4

What is a Bilateral Currency Swap agreement ?

Answer 4

It is an open ended credit line from one country to another at a fixed exchange rate
The country which itself of this loan pays interest to the country which provides it , at a benchmark rate such as LIBOR

Question 5

How does it help the Indian domestic currency ?

Answer 5

Theres a hope that this deal will act as a buffer to shore up Rupee .