RBI conducts $10 billion forex swap to inject liquidity

Mumbai: The RBI on Monday conducted US dollar-rupee swap worth $10 billion for injecting long-term liquidity in the system, with the auction eliciting strong demand.

The first leg settlement will take place on March 26 and the second on March 27, the RBI said. The USD/INR Buy/Sell swap auction for a tenor of 3 years was oversubscribed 2.23 times.

The RBI said it received 325 bids during the auction and 96 of them were accepted for amount totalling $10.04 billion.

The cutoff rate was set at 5.86 rupees. The swap was in the nature of a simple buy/sell foreign exchange swap from the Reserve Bank side. A bank sells US dollars to the Reserve Bank and simultaneously agrees to buy the same amount of US dollars at the end of the swap period, 36 months in this case.