RBI receives 2X bids at USD/INR buy-sell swap auction; accepts $5.07 bn

RBI receives 2X bids at USD/INR buy-sell swap auction; accepts $5.07 bn

The Reserve Bank of India (RBI) on December 16 received more than double the bids at the USD/INR Buy/Sell Swap Auction, but accepted bids worth $5.07 billion.

According to the central bank's release, the RBI received bids worth $10.35 billion, but the central bank accepted $5.07 billion bonds at cut-off premium of 765 paisa.

The number of bids received at the auction was 22 bids, of which 118 bids were accepted. the bid to cover ratio was 2.07, and Weighted Average Premium of accepted bids was at 777.57 paisa, release said.

The near leg or spot leg is on December 18, 2025, and the far leg is on December 18, 2028.

In this mechanism, RBI buys U.S. Dollars from banks in exchange for Rupees (first leg) and agrees to sell them back at a pre-determined future date along with a premium (reverse leg).

On December 8, the central bank said t will conduct $5 billion USD/INR Buy/Sell Swap auction for a tenure of thirty-six months.

The RBI announced this auction during the announcement of the December monetary policy in order to inject durable liquidity in the banking system.

As per estimates by the experts, this auction will approximately inject Rs 45,000 crore liquidity into the banking system, which will lead to easing rates on the overnight instruments and help in better transmission of repo rate cut done by the central bank.