Mumbai, March 5, 2025 – The Reserve Bank of India (RBI) has announced a USD/INR Buy/Sell swap auction worth USD 10 billion as part of its long-term liquidity management strategy. The auction, scheduled for March 24, 2025, will have a 36-month tenor, with the near-leg settlement set for March 26, 2025, and the far-leg settlement on March 27, 2028.
This move aligns with the central bank’s broader effort to ensure stable liquidity conditions in the foreign exchange market while managing volatility in the rupee. The swap mechanism allows market participants to exchange U.S. dollars for Indian rupees with the RBI, with a pre-agreed repurchase arrangement at the end of the tenure.
Market participants will be required to place bids based on the premium they are willing to pay for the swap, expressed in paisa terms up to two decimal places. The auction will follow a multiple-price format, meaning successful bids will be accepted at the premium quoted by each participant, rather than at a uniform rate. The cut-off will be determined based on the highest premium accepted by the RBI.
The swap auction is expected to provide banks and financial institutions with additional liquidity, facilitating smoother foreign exchange transactions and mitigating short-term funding pressures. With global market conditions remaining volatile, this initiative is seen as a proactive measure to maintain stability in India’s financial system.
The RBI’s decision comes amid ongoing efforts to balance capital flows, support economic growth, and ensure orderly movements in the currency market. The impact of the auction on the rupee and money market liquidity will be closely monitored by analysts and market participants in the coming weeks.