India–Japan Bilateral Currency Swap Agreement (BSA)

India–Japan Bilateral Currency Swap Agreement (BSA)

India and Japan recently renewed their Bilateral Currency Swap Arrangement (BSA), which came into effect on 28 February 2026. According to the announcement by the Reserve Bank of India, the size of the agreement has been maintained at USD 75 billion, making it one of the largest bilateral currency swap arrangements in the world. The agreement allows the central banks of both countries to exchange their local currencies for foreign currency liquidity during financial stress.

A bilateral currency swap arrangement is a financial agreement between two central banks under which they can temporarily exchange their currencies at a predetermined rate. For example, India can obtain US dollars or Japanese yen from Japan by providing Indian rupees as collateral, and the transaction is reversed later at the agreed rate along with interest. Such arrangements act as a financial safety net, helping countries manage short-term balance of payments pressures or sudden foreign exchange shortages.