In order to boost long-term liquidity in the banking system, the Reserve Bank of Inda (RBI) will conduct a $5 billion USD-INR buy-sell swap auction on May 26, 2026. The auction also comes at a time when the rupee has significantly depreciated against the American currency amid ongoing global uncertainties.
The RBI said ‘On a review of current and evolving liquidity conditions, it has been decided to conduct a USD/INR Buy/Sell swap auction of $5 billion for a tenor of three years.’ The swap is in the nature of a simple buy/sell foreign exchange swap from the Reserve Bank side. It stated 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.
Further, it noted that the market participants would be required to place their bids in terms of the premium payable to the Reserve Bank for the swap tenor, expressed in paisa terms up to two decimal places. The auction cut-off will be based on the premium. The auction would be a multiple price-based auction -- successful bids will get accepted at their respective quoted premium. Under this auction, the minimum bid size will be $10 million and in multiples of $1 million thereafter.
