New Delhi : The government decided to set up a task force which will look at the possibility of having currency swap agreements with key trading partners, a move which would help in bridging current account deficit. Hitting record lows consistently, the rupee has depreciated by nearly 15% since April.
The 11-member task force would include representatives from the commerce ministry, department of economic affairs and financial services, RBI, SBI, CII, Ficci and exporters body FIEO.
“In view of the rising trade deficit and consequent CAD, a need has been felt to examine the role of Currency Swap Arrangement/Agreements in order to suggest a possible mechanism to address the issue. It has been decided to constitute a Task Force,” an official statement said. The issue came up for discussion during the meeting of Board of Trade which was chaired by Commerce and Industry Minister Anand Sharma. “The Task Force may submit its recommendations to the Department of Commerce in four weeks,” it said. Currency swap agreements involve exchange of one currency for another currency.
A dollar swap arrangement would help India support the rupee. 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 signed currency swap agreements with Japan (USD 15 billion) and Bhutan (USD 100 million).
The Federation of Indian Export Organisations (FIEO) President Rafeeque Ahmed said: “We can look at currency swap arrangement with China, Japan and European Union, among other nations.”