RBI FX Swaps Pull Hedging Costs to Two-Month Low
The Reserve Bank of India conducted aggressive buy-sell dollar swaps over the last ten days to manage liquidity and support the rupee. These operations pushed one-year hedging costs down to 2.92% as markets await the central bank's upcoming interest rate decision on Friday.
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The Reserve Bank of India drove one-year FX hedging costs to a two-month low of 2.92% through aggressive buy-sell dollar/rupee swaps. Premiums dropped from a mid-May peak of 3.50% as the central bank countered the liquidity impact of spot dollar sales. The move stabilizes the rupee ahead of a policy decision following a 6.5% currency decline this year.
