The Reserve Bank of India and Bank of Japan have clinched a bilateral swap arrangement (BSA) for exchanging their local currencies against the US dollar for up to USD 3 billion.

The proposed agreement will not only strengthen mutual co-operation between Japan and India, but it will also supplement the existing international financial arrangements and short-term liquidity difficulties.

The BSA became effective on June 29, 2008.

With the commencing of swap arrangement, the countries will have bi-annual consultations on economic and financial conditions.