RBI Completes $5 Billion Sell/Buy Swap Deal: Report

Ira Singh
Khabar Khabaron Ki,12 Mar’24

New Delhi. The Reserve Bank of India (RBI) reportedly did not roll over the US Dollar (USD) 5 billion sell/ buy swap (conducted on March 8, 2022) that matured on Monday, in a bid to augment Rupee liquidity in the banking system ahead of direct tax and goods & service tax (GST) outflows.

The RBI had conducted the aforementioned 2-year sell/buy swap to enhance Dollar liquidity in the market.

A sell/buy foreign exchange swap entails a bank buying US Dollars from RBI and simultaneously agreeing to sell the same amount of US Dollars at the end of the swap period. With the RBI not rolling over the swap, banks will get Rupee liquidity and RBI will get Dollar liquidity.

The RBI’s purported move to take delivery of the swap will further boost India’s forex reserves, which are already at a two-year high. India’s forex reserves stood at $625.6 billion as of March 1, according to data published by the central bank.

The data, which will include the changes in forex reserves due to the swap maturity, will be released on March 22.

The change in reserves resulting from the swap delivery may not precisely match the $5 billion amount, a senior treasury official at a private bank reportedly explained.

The RBI officials said, dollars were supplied last Thursday and Monday via spot over March swaps, which would impact the headline reserves.