Japanese PM in India on economic mission
Looking to shore up a financial friendship:
Japan: Japanese Prime Minister Yoshihiko Noda left for India
yesterday where economic ties will be the order of the day as Tokyo
looks to shore up a financial friendship.
The day after returning from Beijing where the focus was on
geopolitical issues -- particularly in the aftermath of the death of
North Korean leader Kim Jong-Il -- Noda’s trip to New Delhi will be
heavy on business.
In a meeting Wednesday with Indian counterpart Manmohan Singh, the
two are expected to sign a dollar swap accord worth up to $10 billion,
through which Tokyo would provide capital when the rupee plunges against
the US unit, local media said.
“Emerging economies overall are being shaken by the eurozone
sovereign debt crisis,” said Tsuyoshi Ueno, a senior economist at NLI
Research Institute.
“Currencies in emerging economies get volatile when European banks
pull out capital,” he said. “A dollar swap arrangement can help emerging
economies as it promises a supply of dollars in an emergency.” Japan,
which already has a similar accord with South Korea, has seen its
exports tumble for two straight months to November, with sales to the
key European market floundering as the debt crisis grips.
Flooding in Thailand, which is a production hub for many leading
Japanese firms, and a stronger yen have also weighed on Asia’s
second-largest economy, which is still running to catch up from the
effects of the March 11 quake and tsunami disaster. Helping emerging
economies such as India also supports Japan’s own export-reliant
economy, Ueno said.
“India, as much as South Korea, is a very significant market for
Japan. Such a dollar swap accord is ultimately aimed at stabilising
Japan’s own economy,” he said. Shortly before Noda’s departure, Finance
Minister Jun Azumi told reporters that nothing was finalised on the
currency swap yet.
“Talks are ongoing. I am hopeful that an agreement will be reached at
the Japan-India summit talks,” he said.
Japan is trying to widen and deepen its trade and financial
partnerships as it looks to catch up with export rival South Korea, and
after China overtook it as the world’s second-largest economy in 2010.
Noda’s predecessor Naoto Kan met Singh in October last year and stressed
the warm ties linking two of Asia’s biggest democracies at a time of
high diplomatic tensions between Japan and communist China.
Relations between Tokyo and Beijing sharply deteriorated last year
following Japan’s arrest of a Chinese fishing boat captain near a
disputed island chain in the East China Sea. Beijing reacted furiously,
cancelling high-level talks and civilian exchanges while suspending
exports of rare earth minerals, which are crucial for Japan’s high-tech
products -- from computer components to hybrid cars. Japan has since
tried to diversify rare earth supplies, more than 90 percent of which
are controlled by China, and is looking to jointly develop rare earth
mineral deposits in India. AFP
|