Mumbai: The RBI on Friday conducted US dollar-rupee swap worth $10 billion for injecting long-term liquidity in the system, with the auction eliciting robust demand. The settlement of auction will take place on March 4 and March 6.
The USD/INR Buy/Sell swap auction for a tenor of 3 years was oversubscribed 1.62 times.
The RBI said it received 244 bids during the auction and 161 of them were accepted for amount totalling $10.06 billion.
The auction comes in the backdrop of rupee trading at 87.46 against the US dollar amid global uncertainties. The swap was in the nature of a simple buy/sell foreign exchange swap from the Reserve Bank side.
A bank shall 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.
While announcing the swap auction last week, the RBI had said: “In order to meet the durable liquidity needs of the system, the Reserve Bank has decided to inject Rupee liquidity for longer duration through long-term USD/INR Buy/Sell swap. Accordingly, the RBI will be conducting a USD/INR Buy/Sell swap auction of $10 billion for a tenor of 3 years.” In January also, the RBI had announced liquidity injection worth over Rs 1.5 lakh crore through different instruments, including $5 billion forex swap.
Meanwhile, India and Japan have renewed the $75 billion bilateral currencies swap agreement, the Reserve Bank said in a statement on Friday. The Bilateral Swap Arrangement (BSA) is a two-way arrangement where both authorities can swap their local currencies in exchange for the US dollar.
The Bank of Japan, acting as agent for the Minister of Finance of Japan, and the Reserve Bank of India signed the Second Amendment and Restatement Agreement of the BSA, the central bank said.
The renewed BSA is effective Friday (February 28, 2025).
The size of the BSA remains unchanged — up to 75 billion US dollars, the RBI said.