The rupee fell 13 paise in the morning trade after the Reserve Bank of India (RBI) governor Sanjay Malhotra said the central bank would conduct $5 billion 3-year USD/INR buy sell swap auctions on December 16.
“...Three-year USD/INR Buy Sell swap of $5 billion this month to inject durable liquidity into the system,” Malhotra said while sharing the policy outcome on December 5.
Forex swaps are an RBI tool to manage liquidity, where the central bank dollars from banks (infusing rupees) and simultaneously, agrees to sell dollars back to them later at a pre-set premium, injecting long-term rupee liquidity, stabilising the rupee and managing reserves.
The rupee slipped to 89.98 against the dollar after opening at 89.85, 13 paise up from the previous day's close.
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The six-member Monetary Policy Committee (MPC) unanimously decided to cut the repo rate to 5.25 percent from 5.5 percent, Malhotra said. The MPC kept the stance unchanged at "neutral".
The standing deposit facility (SDF) rate remains changed to 5 percent and the marginal standing facility (MSF) rate and the Bank Rate at 5.5 percent.
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