India, Japan expand currency swap arrangement to $50 billion

Aim to counter any short-term liquidity problems both countries may have

India and Japan on Friday expanded an arrangement for swapping their local currencies against the US dollar, raising the size to as much as $50 billion from the original $15 billion.

The expanded swap arrangement, signed by Bank of Japan Governor Haruhiko Kuroda and his Indian counterpart Raghuram Rajan, will be effective until December 2015, the BOJ said in a statement on Friday.

The swap line will be effective from Friday, the RBI said.

The swap arrangement aims to counter any short-term liquidity problems the two countries may face in future.

"This expansion of the bilateral swap arrangement will contribute to the stability of global financial markets including emerging economies," the BOJ statement said.