The government is mulling currency-swap agreements with key trading partners as a possible instrument to help stabilise the volatile rupee. Commerce and industry minister Anand Sharma said on Tuesday that a task force would be set up to examine this possibility.
The task force would have 7-8 members, including representatives from the finance ministry, bank, exporters community and the commerce ministry.
“We are looking at the possibility (of currency swap arrangements with a few countries). The task force/committee will be notified which will have bankers. The commerce secretary will take it forward and the report will be submitted to the government within four weeks,” Sharma said.
Currency swap agreements involve exchange of one currency for another currency. Swap agreements in US dollar is expected to provide confidence to the market and prevent excess volatility in financial and foreign exchange markets. India has an arrangement with Japan for the the Delhi-Mumbai Industrial Corridor.
An official said the task force will most likely be notified by the end of this week.
We are thinking on these lines to ease the pressure and also (control) the outgo of the hard currency wherever it is possible,” Sharma said.
Currency swaps have recently emerged as an important derivative tool after the global financial crisis of 2008 to hedge the exchange rate risks.
India has currency swap agreements with Japan ($15 billion) and Bhutan ($100 million).
China has also shown active interest in entering into such an agreement with India.