NEW DELHI: Japan and India struck a $15 billion currency swap deal
Wednesday that could support the sagging rupee as Japanese premier
Yoshihiko Noda made a lightning trip to New Delhi to push closer
ties.The deal was part of a slew of agreements clinched by India and
Japan, which is seeking to forge stronger alliances in the Asian region
as a counterweight to China s growing might.'I am convinced we need to
strengthen the economic partnership,' said Noda, whose country sees
India an attractive market with its increasingly affluent middle class,
especially with the European and US economies slowing.'Japan has
technology and capital while India has a young workforce as well as
abundant demand for infrastructure,' he said, calling the
'complementarity' between the second- and third-largest Asian economies
'unmatched'.Coming on the heels of a trip to China where the main focus
was on political diplomacy, heightened by the aftermath of the death of
North Korean leader Kim Jong-Il, Noda s visit to India stressed economic
relations.The currency swap, under which Japan could lend India dollars
to defend the ailing rupee, is an expansion of a $3 billion accord that
expired earlier this year.'Japan and India will expand their currency
swap from a current $3 billion to $15 billion,' Noda told a news
conference in the Indian capital late Wednesday at the close of his
36-hour trip.Japan, which has $1.2 trillion in foreign currency
reserves, has been moving to enhance its global financial role, and
struck a similar swap accord with South Korea in October.The currency
agreement is an extra weapon for India, which has $300 billion in
reserves, to use in propping up the rupee.The rupee has slid 15 percent
this year against the dollar as overseas investors have withdrawn funds
as they hunt for safe havens in the midst of global financial turmoil.
Prime Minister Manmohan Singh said he was 'extremely happy' with the
outcome of his talks with Noda.The two leaders said a landmark
free-trade pact signed in February under which the high-tech nation and
the South Asian giant will scrap tariffs on 94 percent of goods within a
decade had huge potential for boosting commerce.The countries two-way
trade stands at around $14 billion and is targeted to rise to $25
billion by 2014 -- but that sum is still a fraction of Japan s
$340-billion trade with China.Noda also announced a $4.5-billion
investment in an ambitious $100-billion infrastructure plan to create a
manufacturing and freight corridor from New Delhi to financial hub
Mumbai as well as $1.7 billion in loans for rapid transit and
conservation projects.The two countries also said nuclear negotiations
that stalled after the Fukushima nuclear disaster in March 2011 were
headed in the 'right direction.' Japan and India launched talks in June
2010 on a nuclear cooperation pact that would allow Tokyo to export its
cutting-edge technology to the energy-hungry South Asian nation, a hotly
contested market for atomic plants.Japan is worried that nuclear-armed
India has not signed the Nuclear Non-Proliferation Treaty. But Japanese
government spokesman Nori Shikata told reporters that 'as a matter of
basic policy we re interested in promoting use of Japanese civilian
nuclear technology in India'.Prime Minister Noda said use of civilian
nuclear technology could help India lower carbon emissions blamed for
global warming but added he could not say when the talks might produce
an agreement.Ties between the countries have warmed only in recent
years. Tokyo was traditionally a big lender to India but not a
significant business partner and it was a strong critic of New Delhi s
unexpected 1998 nuclear weapons test.
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