RBI announces another $5-bn dollar/rupee sell-buy swap on April 26

The move is aimed to take out excess liquidity

The Reserve Bank of India will conduct a dollar-rupee sell-swap auction for $5 billion on April 26, 2022 for elongating the maturity profile of forward book and smoothen the receivables relating to forward assets.

Treasury executives said the move is aimed at managing liquidity in the domestic system. Through this it would suck out excess liquidity for a long duration and also signal for further upward push for interest rate at short end. This will be the second such auction after conducting the same operation on March 08, 2022.

The proposed auction on April 26 and one conducted on March 8, 2022 would mean RBI would sale $10 billion and take out rupee liquidity worth Rs 75,000 crore, analysts said.

It may have very little impact on the value of Indian currency against the US dollar. The value is more determined by flows and demand in the daily market.  

At dollar-rupee sell-swap auction held on March 08, the RBI has accepted $5.135 billion against the notified amount of $5 billion.  The auction saw three times more bids than the notified amount.