RBI Unveils Massive Liquidity Boost with Forex Swap Auction

The Reserve Bank of India (RBI) announced a significant liquidity injection, involving a USD/INR swap auction worth USD 5 billion and open market operations purchasing government bonds totaling Rs 60,000 crore. These measures precede the RBI's upcoming monetary policy decision, potentially leading to a rate cut.

The Reserve Bank of India (RBI) has launched a substantial effort to inject liquidity into the banking system. As part of this initiative, a USD/INR buy-sell swap auction worth USD 5 billion will be conducted on January 31, with a tenor of six months.

In addition to the forex swap, the RBI announced open market operations aimed at purchasing government bonds worth Rs 60,000 crore, alongside a Variable Rate Repo auction of Rs 50,000 crore. These actions come just before the RBI's next bi-monthly monetary policy review.

The RBI's strategy to boost liquidity has created a positive sentiment in the stock market. However, the Indian rupee experienced a slight depreciation, closing at 86.57 against the US dollar, marking a 26 paise decline.

(With inputs from agencies.)