RBI $10-Billion Swap Auction Draws $22.3 Billion Bids
Why in the news
RBI’s second long-term dollar-rupee swap auction of $10 billion drew heavy demand, showing confidence in central bank liquidity facilities.
Key facts
| Aspect | Detail |
|---|---|
| Auction size | $10 billion |
| Bids received | $22.3 billion (over 2x) |
| Average premium | 592 paisa (expected 580-590) |
| First auction premium (28 February) | 673 paisa |
| Daily average liquidity deficit in March | ₹1.6 lakh crore |
| Second leg | March 2028 |
How the swap works
- In a buy-sell swap, RBI first buys dollars and releases rupee liquidity.
- In the second leg it sells the $10 billion back at the prevailing exchange rate plus the agreed 592 paisa premium.
- Purpose: address the liquidity deficit persisting since mid-December 2024.
Market views
- Rajeev Pawar (Ujjivan SFB): the higher premium shows people will pay more to swap their dollars.
- Gopal Tripathi (Jana SFB): the lower premium than last time is positive for the market.
- A lower premium than February signals easing pressure on liquidity and forex stability.
Exam angle
- Instrument: dollar-rupee buy-sell swap; tenor runs to March 2028.
- One paisa is one hundredth of a rupee; premium quoted in paisa.
- Bids were over two times the notified amount.