Swap Auction Key Features:
- Objective: The primary objective of this long term USD-INR buy/sell windfall is durable rupee liquidity infusion
- Size of the Auction: $10 Million
- Tenor: 3 years
- Bidding Method
- Market players will be able to put in their bids according to the premiums they intend to pay (in paisa terms with two decimals)
- Multiple price auction – Those bids that are successful will be honored at their respective quoted premiums
Market Impact & Expert Views
- The Second Swap Auction in a Month
- On January 31, RBI had infused $5.1 billion with a six month swap
- Short Term Rupee Strengthening Expected
- On the short term basis, this swap might actually stabilize the rupee by providing immediate liquidity support to counter the pressure on foreign fund outflows, said Dilip Parmar of HDFC Securities.
- Spot USD/INR can be expected to move towards 86.30.
- Eligible Participants
- Only Authorized Dealers Category 1 Bank will be eligible to participate in the auction.
