Consider the following statements regarding the renewed India-Japan Bilateral Swap Agreement: 1. It permits both countries to swap their local currencies directly without involving the US dollar. 2. The primary goal is to stabilize exchange rates and ensure liquidity during financial crises. 3. The total value of the renewed agreement is significantly less than the previous agreement, reflecting reduced financial risk. How many of the above statement is/are correct?
Only one
Why in the News?
"India and Japan Renew $75 Billion Currency Swap Agreement”
Statement 1 is incorrect
The India-Japan Bilateral Swap Agreement (BSA) is specifically designed for exchanging local currencies for US dollars, not a direct local currency swap. The US dollar acts as the intermediary currency in this agreement.
Statement 2 is correct
The BSA's core purpose is to provide a safety net, allowing both India and Japan to access needed US dollar liquidity, thus mitigating exchange rate volatility during economic downturns.
Statement 3 is incorrect
The renewed BSA maintains the $75 billion value, indicating continued financial cooperation and support, not a reduction due to perceived lower risks.
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2. It will receive funding from the Global Environment Facility (GEF).
Which of the above statements is/are correct?
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