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Informist, Thursday, Mar. 12, 2026

 

--Dealers: Expect RBI to announce dollar-rupee buy-sell swap auction Thu 

--Dealers: RBI may announce up to $10 bln dollar-rupee buy-sell swap auction 

--Dealers: RBI may announce dlr-rupee buy-sell swap to reduce forward premia 

--Dealers:RBI may announce dlr-rupee buy-sell swap to infuse rupee liquidity 

 

By Kabir Sharma and Aaryan Khanna

 

MUMBAI/NEW DELHI – The Reserve Bank of India may announce a dollar-rupee buy-sell swap auction of up to $10 billion later on Thursday, five foreign exchange dealers said. The central bank may conduct the auction for a period of three years, as has been the case in recent such liquidity operations, the dealers said.

 

"The RBI has been active across the curve in the secondary today," a dealer at a private sector bank said. "There is a strong sense in the market that he may do a $10 billion buy-sell swap soon, maybe announce it after market hours."

 

Dealers said the RBI aims to limit the surge in forward premiums with the dollar-rupee swap amid heightened volatility in the spot rupee. At the last such swap auction in February, the central bank saw overwhelming demand. RBI got bids worth $25.03 billion, against the notified amount of $10 billion.

 

The Indian unit touched a record low of 92.36 in the spot market on Thursday, while the one-year forward premiums rose to an over two-month high of 3.00%. The domestic currency has been under pressure since the begining of the conflict between US-Israel and Iran at the end of last month. 

 

The RBI has used its arsenal of foreign exchange reserves to defend the rupee through periods of voaltility to prevent runaway depreciation in the currency. Dealers estimate that the RBI has sold nearly $18 billion–$20 billion in the currency market in its defence of the rupee since the start of the war. 

 

The central bank also aims to add rupee liquidity to the banking system via the dollar rupee swaps. The RBI is also scheduled to infuse INR 500 billion on Friday via an open market operation auction of gilts.

 

The net liquidity absorbed by the RBI from the banking system – a proxy for the systemic liquidity surplus – was INR 2.40 trillion Wednesday, according to latest RBI data. The surplus has averaged INR 2.54 trillion since Feb. 1, or around 1% of banks' net demand and time liabilities. RBI Governor Sanjay Malhotra has previously aimed for this level of surplus liquidity for quick transmission of the Monetary Policy Committee's 125 basis points of rate cuts last year.

 

Advance tax outflows at the end of this week and payments for goods and services tax next week are expected to drain around INR 4 trillion from the banking system, putting strain on rupee liquidity. To ensure a comfortable buffer, the central bank has already announced rupee liquidity infusion through INR 1 trillion of open market operation auctions in two tranches this week. Malhotra had said in February that the RBI's liquidity management would be pre-emptive and proactive with sufficient allowance for unanticipated fluctuations, including intervention in the forex market.  End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Avishek Dutta

 

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