RBI Injects $10 Billion into System via Oversubscribed Dollar-Rupee Swap

The Reserve Bank conducted a US dollar-rupee swap auction worth $10 billion, generating robust demand. The auction, oversubscribed by 2.23 times, attracted 325 bids, of which 96 were accepted. The operation aims to inject long-term liquidity, with the cutoff rate set at 5.86 rupees.

The Reserve Bank of India (RBI) conducted a significant US dollar-rupee swap on Monday aimed at injecting $10 billion in long-term liquidity into the financial system. The auction received substantial interest, being oversubscribed by 2.23 times.

Out of the 325 bids received, the RBI accepted 96, amounting to a total of $10.04 billion. The settlement process will occur over two days, with the first leg on March 26 and the second on March 27, according to the RBI.

Set at a cutoff rate of 5.86 rupees, the swap was a straightforward buy/sell foreign exchange operation. Banks sell US dollars to the Reserve Bank and concurrently agree to repurchase the same amount after 36 months, thereby contributing to sustained liquidity in the market.

(With inputs from agencies.)