The RBI set the swap’s cutoff premium at Rs 5.86, lower than the Rs 6.55 set for a similar-sized and duration auction held late last month. A liquidity injection will supplement the interest rate cut announced by the RBI governor in early February.
Mumbai: The Reserve Bank of India’s (RBI) $10 billion, 3-year dollar/rupee buy-sell swap auction on Monday to inject long-term liquidity in the system was oversubscribed 2.23 times.
The RBI said that it received 325 bids during the auction and 96 bids were accepted for an amount totaling $10.04 billion equivalent of rupees into the banking system on Wednesday. The transaction will be reversed in three years.
The swap is part of a series of measures that the RBI has taken to ease a liquidity crunch in the banking system. The liquidity deficit stood at about Rs 2 lakh crore last Friday. So far the RBI has injected about $64 billion worth of rupee liquidity into the system through open market bond purchases, longer-tenor repo operations, and FX swaps, before Monday’s auction.
The RBI set the swap’s cutoff premium at Rs 5.86, lower than the Rs 6.55 set for a similar-sized and duration auction held late last month. A liquidity injection will supplement the interest rate cut announced by the RBI governor in early February.
Meanwhile, the rupee rose for the seventh consecutive session on Monday to close 31 paise higher at 85.93 against the dollar, wiping off all its losses in 2025, as inflows increased amid conspicuous absence of RBI in the FX market. The fundraising by companies and FII inflows also impacted the local currency positively. The rupee had opened at 85.93, touched an intraday high of 85.49, and a low of 86.01 before closing at 85.67 against the dollar. On Friday too the rupee had gained 38 paise to close at 85.98. In the last seven trading sessions, the rupee has appreciated by 154 paise.
