RBI likely to have rolled over a part of $5-billion forex swap to boost liquidity
Reserve Bank of India may have rolled over a portion of its $5-billion foreign exchange swap that was due for maturity on Monday by conducting an ultra-short term swap whose maturity would augment system liquidity amid tax outflows and currency leakage in the festive season.
On April 28, 2022, the RBI concluded a sell-buy foreign exchange swap under which banks bought US Dollars from the central bank and simultaneously agreed to sell the same amount of dollars at the end of the swap period. The maturity of the swap, which was due on October 23, would have released around ₹40,000 crore into the banking system as purchases of dollars by the RBI inject rupee liquidity into the banking system.
«The RBI most probably would have rolled over a portion of the transaction because we have not seen too much of an upside in the dollar-rupee.
Given the quantum of the FX swap, if they (the RBI) would have bought dollars, the exchange rate should have gone to 83.25-83.30/$1,» said Anil Kumar Bhansali, head of treasury at Finrex Treasury Advisors.
«Not only has the dollar-rupee exchange rate not gone up that much but it's still being sold (dollars being sold). So, I feel the RBI would have rolled over the transaction.
