RBI to Conduct USD/INR Buy/Sell Swap Auction to Inject Liquidity

The Reserve Bank of India (RBI) has announced a USD/INR Buy/Sell swap auction of USD 5 billion, scheduled to take place on January 31, 2025. This measure, aimed at managing liquidity conditions in the banking system, will be conducted with a tenor of six months.

According to the RBI’s notification, the auction will take place between 10:30 AM and 11:30 AM on January 31, 2025. The near leg (spot) settlement date for the swap is February 4, 2025, while the far leg settlement date is August 4, 2025.

Market participants are required to submit bids in terms of the premium they are willing to pay, expressed in paisa terms up to two decimal places. The auction will follow a multiple-price format, meaning successful bids will be accepted at their respective quoted premium levels.

This swap auction is part of the central bank’s ongoing efforts to ensure adequate liquidity in the financial system while providing stability in the foreign exchange market. Market participants and financial institutions are expected to closely watch the outcome, as it could influence liquidity dynamics and currency market trends in the coming months.

Further details regarding the auction will be made available by the Reserve Bank in due course.