Indian central bank’s US$10 billion FX swap subscribed three times over
The swap is part of its measures to inject US$32 billion of rupee liquidity into the banking system
[MUMBAI] The three-year dollar/rupee buy-sell swap conducted by the Reserve Bank of India (RBI) drew strong demand on Tuesday (Jan 13), with the auction drawing bids a little under three times the US$10 billion size.
The central bank accepted 42 bids at the foreign-exchange (FX) swap auction, with the premium cut-off set at 7.28 rupees (S$0.10). A total of 348 bids worth US$29.9 billion were received.
Bankers had expected robust demand, as corporates sought to lock in hedges on overseas borrowings, and take advantage of an attractive gap between onshore and offshore swap rates.
The settlement of the initial leg of the FX swap will take place on Friday, through which the RBI will inject rupee liquidity into the banking system.
The transaction will be reversed three years later. The swap is part of the central bank’s measures to inject US$32 billion of rupee liquidity into the banking system, aimed at boosting the transmission of rate cuts.
Despite the RBI cutting policy rates by a cumulative 125 basis points in 2025, the yield on India’s 10-year government bond declined by only 17 basis points in that period.
Navigate Asia in
a new global order
Get the insights delivered to your inbox.
The RBI, under chief Sanjay Malhotra, has been aggressive about injecting liquidity, though some of the infusions have been blunted by FX intervention to support the rupee, Asia’s worst-performing currency in 2025. REUTERS
Decoding Asia newsletter: your guide to navigating Asia in a new global order. Sign up here to get Decoding Asia newsletter. Delivered to your inbox. Free.
Share with us your feedback on BT's products and services
