The Reserve Bank of India concluded its second long-term forex swap to infuse liquidity into the domestic banking system.
By purchasing $5 billion in foreign exchange for a tenure of three-years, the central bank has infused Rs 34,874 crore, it said in a release on Tuesday.
The RBI accepted five offers worth $5 billion.Bids worth $18.65 billion were received. This was spread across 255 offers.The cut-off premium was set at 838 paise. The cut-off premium was higher than the 790 paise forecast by forex traders.
The RBI had surprised markets in March by announcing that it will infuse rupee liquidity using long-term forex swaps. Until then, the central bank had mostly relied on bond purchases under its open market operations programme to infuse liquidity. When announcing the swap, the RBI said this would add another liquidity tool to the central bank’s toolkit.