The Reserve Bank of India (RBI) plans a $10 billion forex swap on 24th March and a Rs 1 lakh crore bond purchase to manage liquidity.

In recent months, RBI has used buy/sell swaps instead of directly selling dollars. Some earlier transactions are maturing, so RBI is extending obligations.

On 28th February, it postponed $10 billion in dollar sales by three years. Another $10 billion swap will push obligations further by 36 months.

RBI holds around $80 billion in open currency positions. If more transactions mature, it may sell dollars from reserves, but the rupee’s recent strength makes this manageable.

These swaps will lower hedging costs for companies by about 15 basis points, encouraging more external commercial borrowings (ECBs) and boosting liquidity as exporters bring in earnings sooner.

RBI’s Rs 1 lakh crore bond purchase will ease liquidity concerns, lower interest rates, and support banks and NBFCs. Bond yields and short-term borrowing costs will drop, possibly leading banks to cut deposit rates.

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