India Tries to Do a Euro - via Japan

India has managed to obtain a $50 Billion currency swap agreement with Japan, tripling the size of the previous $15 Billion amount. India's govt hopes that this will allow them to buffer drastic changes in the rupee (ie. prop up the rupee, which is more likely to fall than to rise):

http://www.bloomberg.com/news/2013-09-06/india-gets-expanded-50-billion-japan-swap-line-after-rupee-drop.html

It looks like India wants to do a Euro, with Japan's help. Just as the European common currency enabled Germany to export massively without suffering an anti-competitive rise in the value of its local currency, and just as this common currency with Germany also enabled Greece to obtain lots of cheap loans to prop up their own purchasing power without being industrious - likewise, India seems to want to engage in a similar "bargain" with Japan. The problem is that this Faustian bargain proved to be unsustainable for Europe, and led to the current European economic crisis. Similarly, such a scheme could end badly for both India and Japan. However, Greece wasn't led by a Sonia Gandhi desperate to hang onto political power at all costs, and so the Greek PM did resign when German officials demanded a change of govt and of policies to recoup their losses. What might happen in a staredown between India and Japan would be anybody's guess - although I'm sure China would enjoy it.

Are currency swap agreements a form of currency manipulation? When a highly export-oriented economy like Germany or Japan hooks its currency to that of less industrious economies like Greece or India, then does the resultant masking of economic strengths and weaknesses constitute an unfair or risky practice? Has Congress finally found a reliable sugardaddy to latch onto, to give them a new lease on life - at least until some clever observers like Goldman-Sachs find a way to profit by blowing it all up in their faces? How deeply is Congress willing to mortgage India's future, in order to keep itself riding the tiger?

It may be useful to watch what happens to the future bilateral balance of trade between India and Japan as a result of this swap. After all, the Japanese wouldn't be extending such a large currency swap line of credit to India for free, but rather to encourage Indian purchases of Japanese exports - just as the Germans did to the Greeks via the Euro - and a higher rupee relative to the yen should be good for that.