RBI to Conduct 5 Billion Dollar Rupee Swap Auction
The Reserve Bank of India will hold a five billion dollar buy sell swap auction on May 26 to manage banking system liquidity. This move follows recent foreign exchange interventions to support the rupee, which reached a record low of 96.96 per dollar amid rising crude oil prices.
The Reserve Bank of India will conduct a $5 billion dollar/rupee buy/sell swap auction on May 26 to manage domestic liquidity. This three-year tenor follows a period of heavy central bank intervention to support a record-low rupee, which has weakened more than 6% since the Iran war began on October 7, 2023. The move aims to offset the liquidity drain caused by the bank’s recent sales of foreign exchange reserves.
### Countering the Liquidity Drain India has seen its currency weaken significantly due to the ongoing geopolitical tension, which pushed up the price of Brent Crude Oil, increasing the cost of energy imports. The rupee fell to an all-time low of 96.96 per dollar on Wednesday.
