ForumIAS LATEST
- SFG FRC 2027 | Program starts from 19th Dec. 2026 | Admissions open for Entrance Test Click Here to know more →
- Prelims Test Series (PTS) for Prelims 2027 starts 11th Oct. 2026 Click Here to know more →
- [Pre-order] Ethics Redbook 3rd Edition: Delivery starts from 10th October onwards Click Here to Read More →
- 21 Sept. | GS Advance Program (GSAP) for UPSC 2027 Mains starts from 11th Oct. Click Here to Read More →
- The Reserve Bank of India has successfully concluded a forex swap auction intended to ease liquidity conditions.The central bank bought the targeted $5 billion as part of the long term Dollar/Rupee swap auction with a three-year tenor.In turn, Rs 34,561 crore was infused into the Indian banking system.
- Recently,RBI has decided to inject long-term liquidity into the system through foreign exchange swap arrangement.The swap is in the nature of a simple dollar-rupee exchange with the RBI.
- A bank shall sell U.S. dollars to the RBI,in turn the RBI will pay rupees to the participating banks at the current spot rate.
- Simultaneously,the banks will agree to buy-back the same amount of dollars from the RBI after three years,the tenor of current auction.The final exchange rate will be decided by an auction where banks will bid on the forward premium,they are willing to pay.
- The expected benefits of forex swap are (a)Increase liquidity in market (b)Increase in RBI’s foreign exchange reserves and (c)Improve credit as it will put more money in the hands of banks.
