The swap auction was conducted to bolster the RBI’s ability to intervene in the forex market
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The US dollar (USD_/Indian Rupee (INR) buy/sell swap auction for three year tenor conducted by the Reserve Bank of India on Tuesday received a good response, with participants offering to place $9.80 billion with the central bank against the notified amount of $5 billion.The swap auction was conducted to bolster the RBI’s ability to intervene in the forex market to prevent excessive volatility in the Rupee.The swap is in the nature of a simple buy/sell foreign exchange swap from RBI side. A bank sells US dollars to RBI and simultaneously agrees to buy the same amount of US dollars at the end of the swap period.Out of 254 bids that RBI received, it accepted 141 bids, with the weighted average premium of the latter being 920.64 paisaIn a USD/INR swap auction, banks bid a premium (quoted in paisa per US dollar) for swapping USD and INR between the spot leg and the forward leg.The rupee hit an all-time closing as well as intraday low of 96.83 and 96.95 per US dollar, respectively, on May 20. It has now strengthened below the 96 level.Published on May 26, 2026
