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Informist, Friday, Sept. 26, 2025

 

--Dealers: RBI likely selling near-term dollar/rupee forward contracts 

--Dealers:RBI sells fwd dlrs to offset rupee liquidity drain from spot sales 

--Dealers: Dollar/rupee premiums fall across tenures as RBI sells fwd dlrs 

--1-year forward dollar/rupee premium 2.33% vs 2.37% Thu 

 

By Pratiksha

 

NEW DELHI – The Reserve Bank of India is likely to have sold dollars for near-tenure forward delivery on Friday, in order to neutralise its spot interventions and avoid draining rupee liquidity, dealers said. "There has been receiving in the near end forwards. RBI seems to be offsetting the spot intervention in forwards now," a dealer at a state-owned bank said. Some dealers said the central bank is likely to have sold dollars for one- to two-month forward delivery.

 

In the last few days, the central bank has been actively selling dollars in the domestic spot market to prevent sharp depreciation in the Indian unit. Given that spot dollar sales drain liquidity from the banking system, the RBI conducts buy-sell swaps to replenish liquidity. A buy-sell swap entails buying dollars for immediate delivery and entering into a contract to sell these at a future date, thereby postponing the drain on systemic liquidity. 

 

Informist reported earlier in the day citing currency dealers that the central bank is said to have sold almost $5 billion in the last two days to prevent a sharp fall in the rupee. The Indian unit fell to a record low of 88.7975 a dollar on Tuesday. So far in September, the domestic currency has depreciated 0.6% against the dollar.

 

Forward premiums fell across most tenures on Friday, with the premium on the one-year exact-period dollar/rupee forward contract falling to 2.33%, against 2.37% on Thursday. 

 

Earlier this week, banking system liquidity fell into deficit for the first time since the end of March. Most of the crunch was attributed to tax outflows over the past week, due to advance tax, personal income tax and goods and services tax payments to the government. At its worst, the RBI net injected INR 871.83 billion of liquidity into the banking system on Sept. 23 – a proxy for the deficit – the largest since Mar. 25. Even as month-end spending has kicked in since Thursday, call market traders said the RBI's dollar sales had drawn out liquidity of over INR 300 billion this week.

The RBI's recent buy/sell swaps in the dollar/rupee forwards market will add to its net outstanding short positions in forward contracts, which have declined for five straight months till July. RBI's net outstanding short positions in dollar/rupee forward contracts were at $57.85 billion at the end of July.  End

 

With inputs from Aaryan Khanna

 

US$1 = INR 88.72

 

Edited by Tanima Banerjee

 

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