Intends to help bridge the current account deficit.
The government has decided to organize a task force to look into the possibility of having currency swap agreements with key trading partners.
It said that in view of the rising trade deficit and consequent current account deficit, a need has been felt to examine the role of currency swap arrangements in order to suggest a possible mechanism to address the issue.
The task force will examine various types of swap arrangements and their implication for India's trade and financial system. It will also study the pros and cons of these agreements.
The task force is expected to submit its recommendations to the Department of Commerce in four weeks.
Currency swap agreements involve the exchange of one currency for another currency. A dollar swap arrangement would help India support the rupee.
Swap agreements in the US dollar are expected to boost market confidence and prevent excess volatility in financial and foreign exchange markets.
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