RBI to hold 36-mo dollar/rupee buy/sell swap auction for $10 bln on Mar 24
This story was originally published at 18:48 IST on 10 March 2025
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--RBI to hold 36-mo, $10 bln dlr/rupee buy/sell swap 1030-1130 IST on Mar 24
NEW DELHI – The Reserve Bank of India will conduct a $10-billion dollar/rupee buy/sell swap auction on Mar. 24, wherein it will buy dollars for immediate delivery and sell them for delivery after 36 months to meet the durable liquidity needs of the system, the central bank said in a press release Monday. The swap will reverse on Mar. 27, 2028, the RBI said.
The quantum matches the biggest swap auction on record, conducted last month. The RBI had accepted $10.06 billion worth of bids at a cut-off of 655.10 paise at the 36-month dollar/rupee buy/sell swap auction on Feb. 28, against the notified $10 billion.
Banking system liquidity has been in deficit since mid-December, with market participants attributing the tightness to the RBI's spot dollar sales to soften the rupee's depreciation. The RBI has been conducting dollar/rupee buy/sell swaps since December in the currency forwards market intermittently to offset the impact of its dollar sales in the spot market and avert pushing out rupee liquidity. The net liquidity injected by the RBI--a proxy for systemic liquidity deficit--has averaged a little under INR 1 trillion in March, lower than both January and February. The net liquidity injected had improved to a near three-month low earlier this month due to the RBI's liquidity support, including swap auctions, long-term variable rate repo operations and open market operation gilt purchases.
Market participants will place their bids in terms of the premium they are willing to pay to the RBI, in paisa terms up to two decimal places, the release said. The auction will be multiple-price based and will take place between 1030 IST and 1130 IST. The result of the auction will be announced on the same day.
The minimum bid size will be $10 million and multiples of $1 million thereafter. The eligible participants are allowed to submit multiple bids. However, the aggregate amount of bids submitted by a single eligible entity should not exceed the notified amount of the auction, the release said.
The RBI will decide the quantum of the US dollar amount to be accepted. The central bank will also reserve the right to accept bids for less than the aggregate amount, to accept marginally higher than the notified amount due to rounding-off, or to accept or reject any or all the bids, either wholly or partially, without assigning any reasons, the release said.
The RBI had conducted a $5-billion dollar/rupee buy/sell swap auction on Jan. 31 for six months. That swap is set to reverse on Aug. 4. End
US$1 = INR 87.33
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Reported by Aaryan Khanna
Edited by Saji George Titus
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