In a move aimed at addressing the durable liquidity needs of the financial system, the Reserve Bank of India (RBI) has announced a long-term USD/INR Buy/Sell swap auction. The central bank will inject rupee liquidity by conducting a USD 10 billion swap auction with a tenor of three years.
The auction is scheduled to take place on February 28, 2025, between 10:30 AM and 11:30 AM, with the far leg settlement date set for March 06, 2028. Market participants will be required to place their 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 their respective quoted premiums. The cut-off for the auction will be determined based on the premium levels offered by bidders.
This initiative is part of the RBI’s broader strategy to ensure adequate liquidity in the banking system and support economic stability. By leveraging long-term swap mechanisms, the central bank aims to provide sustained liquidity while maintaining exchange rate stability.
Market analysts and financial institutions will closely watch the outcome of this auction as it could influence liquidity conditions and interest rate expectations in the coming months.