SYNOPSIS: RBI announced a $5 billion USD/INR buy–sell swap and Rs. 1 lakh crore OMOs in December to inject durable liquidity, ease overnight rates, and improve transmission of recent repo rate cuts.
The Reserve Bank of India (RBI) announced on 8th December that it will inject long-term liquidity into the banking system through a USD/INR buy-sell swap auction worth $5 billion, with a tenure of 36 months. This move comes amid continued tight liquidity conditions in the financial system, despite recent measures taken by the central bank.
After reviewing prevailing liquidity and financial conditions, the RBI outlined a series of liquidity-enhancing operations scheduled for December 2025. These include open market operation (OMO) purchase auctions of Government of India securities worth a total of Rs. 1,00,000 crore, to be conducted in two tranches of Rs. 50,000 crore each on 11th December and 18th December 2025. In addition, the RBI will conduct the USD/INR buy-sell swap auction of $5 billion on 16th December 2025, with a three-year tenor.
The swap auction will be held on 16th December between 10:30 a.m. and 11:30 a.m. The spot (near-leg) settlement is scheduled for 18th December, 2025, while the forward (far-leg) settlement will take place on 18th December 2028.
Under this mechanism, the RBI will purchase US dollars from banks in exchange for rupees in the first leg and will sell the dollars back at a predetermined future date along with an agreed premium in the reverse leg. Market participants will be required to submit bids quoting the premium they are willing to pay to the RBI for the swap tenure. The bids must be expressed in paisa terms, rounded up to two decimal places.
The RBI announced this auction alongside its December monetary policy to ensure the injection of durable liquidity into the banking system. According to market estimates, the swap operation is expected to infuse approximately Rs. 45,000 crore of liquidity, which could ease overnight money market rates and improve the transmission of the recent repo rate cut across the financial system.
Written by Shivani Singh
Disclaimer
The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Trade Brains Technologies Private Limited or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.
The post RBI to increase long-term liquidity via $5 Bil swap auction and ₹1 Lakh Cr OMOs appeared first on Trade Brains.