RBI Injects Liquidity with Major Security Purchases and Forex Swap

The Reserve Bank of India has announced plans to purchase government securities valued at Rs 1 lakh crore and conduct a $10 billion USD/INR swap auction. These measures aim to inject liquidity into the banking system and involve open market operations in two stages and a forex swap with a three-year tenor.

The Reserve Bank of India is set to bolster the banking system with significant liquidity boosts by purchasing government securities and facilitating foreign exchange swaps. In a bid to stabilize the financial landscape, the RBI will buy securities worth Rs 1 lakh crore.

This operation will be carried out through Open Market Operations (OMOs) across two tranches of Rs 50,000 crore each, scheduled for January 29 and February 5. Notably, the dates have been shifted from the initial announcement of February 5 and February 12.

In addition, a USD 10 billion buy/sell dollar-rupee swap auction with a three-year term will be conducted on February 4. This strategic move involves banks selling US dollars to the RBI with a commitment to repurchase them, effectively enhancing liquidity.