RBI's Liquidity Boost: USD/INR Swap Auction Announced

The Reserve Bank of India (RBI) declared a USD 5 billion buy-sell swap auction to manage liquidity, scheduled for December 16. This move, along with open market operations worth Rs 1,00,000 crore, aims for stable liquidity in the banking system, ensuring effective monetary policy transmission.

The Reserve Bank of India (RBI) has announced a major liquidity management initiative with a USD/INR buy-sell swap auction set for December 16. Valued at USD 5 billion, or approximately Rs 45,000 crore, the auction seeks to inject liquidity into the financial system.

This strategic move involves banks selling US dollars to the RBI and concurrently agreeing to repurchase them at the swap's conclusion. The minimum bid size for participation is set at USD 10 million, allowing banks to partake in multiples of USD 1 million thereafter.

In addition to the swap auction, the central bank will also undertake open market operation purchase auctions for government securities, totaling Rs 1,00,000 crore in two Rs 50,000 crore tranches. These measures aim to maintain stable liquidity conditions, as emphasized by RBI Governor Sanjay Malhotra during the recent monetary policy announcement.

(With inputs from agencies.)