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India Economy

India to Auction $10 Billion to Ease Severe Liquidity Crunch

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1Nojor Desk
  • 23 Feb 25
  • 03:43 AM

The Reserve Bank of India (RBI) is set to auction $10 billion through a three-year currency swap to address the banking sector’s liquidity crisis. This initiative, starting February 28, aims to inject approximately 870 billion rupees into the system. Analysts suggest it may also signal a shift in RBI’s forex policy. Despite a recent repo rate cut, cash shortages persist. The RBI has already infused 3.6 trillion rupees into banks, but further measures are needed as the liquidity deficit reaches 1.7 trillion rupees.

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The Hindu 23 Feb 25

RBI to conduct USD-INR swap auction of $10 bn for 3 years’ tenor to inject liquidity

To address long-term liquidity needs, the Reserve Bank of India (RBI) will conduct a $10 billion USD-INR buy/sell swap auction for a three-year tenor. The auction will take place on February 28, 2025, from 10:30 to 11:30 AM, with a spot settlement date of March 4, 2025, and a far-leg settlement on March 6, 2028. This initiative aims to enhance rupee liquidity and stabilize the banking sector amid ongoing cash shortages, ensuring a steady financial flow in the economy.

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