RBI to inject Liquidity into banking system with Rs 1 Lakh Crore OMO, $10 Billion Forex Swap
This marks the second large auction conducted by the RBI recently; on February 28, the RBI held a similar dollar-rupee buy/sell swap auction worth $10 billion for three years.
RBI to inject Liquidity into banking system with Rs 1 Lakh Crore OMO, $10 Billion Forex Swap
The Reserve Bank of India announced on Monday that it will further inject liquidity into the banking system by conducting open market operations (OMO) and long-tenure dollar-rupee buy/sell swaps. The RBI plans to purchase government securities worth Rs 1 lakh crore in two tranches of Rs 50,000 crore each.
The first auction is scheduled for March 12, with the second auction taking place by March 18. Additionally, the central bank will hold a dollar-rupee buy/sell swap auction of $10 billion for 36 months on March 24.
This marks the second large auction conducted by the RBI recently; on February 28, the RBI held a similar dollar-rupee buy/sell swap auction worth $10 billion for three years.
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In order to maintain orderly liquidity conditions, the central bank stated that it will keep an eye on changing market and liquidity conditions and take appropriate action. It will also issue detailed instructions for each operation separately.
This move has come as the central bank has been trying to infuse durable and transient liquidity in the banking system by various market intervention tools, such as conducting OMO purchases, longer-term and short-term variable rate repo auctions, and dollar-rupee buy/sell swaps. As of March 4, liquidity in the banking system was in deficit of Rs 20,416 crore.
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