RBI receives aggressive bids, infuses ₹34,500 cr. liquidity


Bids for swap auction thrice as much as what was on offer

The first dollar-rupee buy/sell swap auction by Reserve Bank of India (RBI), which was aimed at infusing primary liquidity, saw aggressive bidding by banks, data released by the central bank showed.

The RBI received $16.31 billion in bids for the auction for a notified amount of $5 billion. In turn, RBI infused ₹34,561 crore rupee liquidity.

Market participants said the auction was successful as RBI got bids three times more than what it had intended to purchase, adding that both domestic and foreign banks participated in the auction. “There was aggressive bidding for the auction, almost three times of what was on offer. Cut-off came in line with the market expectation,” said Madhavi Arora, Economist, FX and Rates, Edelweiss Securities.

Fewer OMOs

There is expectation that RBI would conduct more such auctions as there is an appetite in the market, and reduce dependence on open market purchases of bonds. RBI has infused a significant amount of liquidity in the current fiscal through open market operations (OMOs).

“This would be one of the ways RBI would be continuously evaluating. This swap window could be used as and when needed to infuse liquidity,” Ms. Arora said.


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