The swap auction is part of the Central bank’s measures to inject the rupee liquidity into the banking system.
| Photo Credit:
FRANCIS MASCARENHAS

The Reserve Bank of India (RBI) received a good response to the $10 billion US dollar (USD)/ rupee buy/sell swap auction of three years tenor it conducted on Monday. The auction was oversubscribed about 2.22 times.

Further, the cut-off premium was about 69 paise lower at 586 paise against 655.10 paise at the last swap auction of similar size and tenor conducted late February.

This auction will inject about ₹86,000 crore worth of liquidity into the banking system, which has been reeling under a deficit. At the last count, the system liquidity deficit was ₹2.06 lakh crore.

The swap auction is part of the Central bank’s measures to inject the rupee liquidity into the banking system.

The RBI received bids from 325 participants aggregating $22.28 billion at the auction against the notified amount of $10 billion. It accepted bids aggregating $10.04 billion (injecting equivalent amount of the rupee liquidity into banks) at a weighted average premium of 592.32 paise.

In the first leg of the aforementioned swap transaction, banks sold USdollars to the RBI. The RBI will credit the rupee funds to the current accounts of the successful bidders. In the reverse leg of the swap transaction, the rupee funds will be returned to RBI along with the swap premium to get the US dollars back after thirty-six months.

Published on March 24, 2025