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RBI to conduct USD/INR buy-sell swap auction of $5 billion on January 31

29 Jan 2025 Evaluate

The Reserve Bank of India (RBI) has said that it will conduct a USD/INR buy-sell swap auction of $5 billion (about Rs 43,000 crore) for a tenor of 6 months on January 31, 2025 as part of its over Rs 1.5 lakh crore liquidity injection into the banking system. The swap is in the nature of a simple buy/sell foreign exchange swap from the RBI 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. 

RBI said under the swap auction, minimum bid size would be $10 million and in multiples of $1 million thereafter. The eligible participants are allowed to submit multiple bids. However, the aggregate amount of bids submitted by single eligible entity should not exceed the notified amount of auction. It said OMO purchase auctions of Government of India securities for an aggregate amount of Rs 60,000 crore in three tranches of Rs 20,000 crore each will be held on January 30, 2025, February 13, 2025, and February 20, 2025. The 56-day Variable Rate Repo (VRR) auction for a notified amount of Rs 50,000 crore will be held on February 7, 2025.

The RBI had announced open market operations (OMO) purchase auctions of government bonds aggregating Rs 60,000 crore, Variable Rate Repo (VRR) auction of Rs 50,000 crore and foreign exchange swap of $5 billion. The decision on liquidity injections comes days ahead of RBI’s next bi-monthly monetary policy in which the Monetary Policy Committee may opt for a reduction in the benchmark lending rate. 


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