RBI Unwinds Short Dollar Forwards, Uses OMOs to Add Liquidity
Why in the news
With the dollar softening and the rupee steady, the RBI let short forward dollar positions run off and added rupee liquidity through OMOs, rebuilding reserves while keeping banking liquidity in surplus.
Key facts
- The short book was $88.75 billion in February; counting longer swaps it fell to $84.3 billion.
- Positions are mostly short-tenor, so the fall reflects natural maturity, not rollovers.
- RBI buys dollars in the spot market instead of rolling forwards, helping replenish reserves; the move fits its accommodative stance.
| Indicator | Level |
|---|---|
| Forex reserves (April 25) | $688 billion (peak $705 billion, Sept 2024) |
| Rupee on May 5 | ₹84.26 per dollar, up 29 paise |
| Rupee gain in calendar 2025 / FY2025-26 | 1.61% / 1.44% |
Supporting factors
- Cheaper crude and a weaker dollar index.
- Strength in other Asian emerging-market currencies.
Exam angle
- Liquidity tool used: open market operations.
- Reserves peak: $705 billion in September 2024.