RBI to inject additional liquidity via OMO purchase, USD/INR Buy/Sell swap auctions

RBI

The Reserve Bank of India (RBI) on March 5 said that it will infuse liquidity through Open Market Operations (OMO) purchases and USD/INR Buy/Sell swap auctions.

The central bank will conduct two OMO purchases worth Rs 50,000 crore each on March 12 and March 18, and USD/INR Buy/Sell Swap auction of $ 10 billion for a tenor of 36 months on March 24, RBI said in a release.

These measures were announced after the review of current and evolving liquidity conditions in the banking system, release added.

"The Reserve Bank will continue to monitor evolving liquidity and market conditions

and take measures as appropriate to ensure orderly liquidity conditions," release said.

These liquidity announcement came when the liquidity deficit in the banking system has narrowed sharply to Rs 20,416.70 crore as on March 4, from Rs 1.1 lakh crore on March 3, Moneycontrol reported today.

Liquidity in the banking system has been under stress since November 2024 due to tax outflows, heavy selling by foreign portfolio investors in Indian equities and the consequent intervention by the RBI in the forex market to sell dollars, along with lower-than-anticipated government spending.

To support the liquidity in the banking system, the RBI has since late-2024 infused around Rs 3 lakh crore worth of durable liquidity, tapping a combination of VRR auctions, swaps and open market operations.