RBI to conduct USD/INR swap auction of USD 5 bn on Dec 16 to inject liquidity

Mumbai, Dec 8 (PTI) The Reserve Bank on Monday announced it will conduct a USD/INR buy-sell swap auction of USD 5 billion (about Rs 45,000 crore) on December 16 to inject liquidity.

The swap is in the nature of a simple buy/sell foreign exchange swap from the Reserve Bank side, the central bank said.

A bank will sell US dollars to the Reserve Bank and simultaneously agree to buy the same amount of US dollars at the end of the swap period.

"...the Reserve Bank will be conducting a USD/INR Buy/Sell swap auction of USD 5 billion for a tenor of thirty-six months" on December 16, the central bank said in a statement on Monday.

Under the swap auction, the minimum bid size would be USD 10 million and in multiples of USD 1 million thereafter.

Besides, the RBI will also conduct an open market operation (OMO) purchase auctions of government securities for an aggregate amount of Rs 1,00,000 crore in two tranches of Rs 50,000 crore each on December 11 and December 18, 2025.

The RBI also said it will continue to monitor evolving liquidity and market conditions and take measures as appropriate to ensure orderly liquidity conditions.

The central bank had decided on a USD/INR buy-sell swap and OMO after reviewing the liquidity situation and the outlook.

The decision on the two measures to manage liquidity conditions was announced by RBI Governor Sanjay Malhotra last week, while unveiling the bi-monthly monetary policy.

"I would like to reiterate that we are committed to providing sufficient durable liquidity to the banking system. We continuously assess the durable liquidity requirements of the banking system due to changes in currency in circulation, forex operations, and reserve maintenance. Going forward, too, we shall continue to do so," he had said.

The measures will ensure adequate, durable liquidity in the system and further facilitate monetary transmission, he added. PTI NKD NKD BAL BAL