RBI to Launch $5 Billion USD-INR Swap Auction Amid Currency Fluctuations

The Reserve Bank of India is preparing to conduct a $5 billion USD-INR buy and sell swap auction to improve liquidity in the banking system. Scheduled for May 26, this move comes as the rupee has weakened against the dollar amid global economic uncertainties. The auction will allow banks to sell US dollars to the RBI and agree to repurchase them later, with bids based on the premium offered. This strategic initiative aims to stabilize the currency and support the financial sector.

By Narendra Chaudhary May 20, 2026, 18:45 IST

RBI's Strategic Move to Enhance Liquidity

Mumbai: The Reserve Bank of India (RBI) is set to initiate a USD 5 billion USD-INR buy and sell swap auction next week, aimed at bolstering long-term liquidity within the banking sector.

Scheduled for May 26, this auction is particularly timely as the Indian rupee has faced notable depreciation against the US dollar amidst ongoing global economic uncertainties.

According to a circular from the central bank, "After reviewing the current liquidity landscape, it has been decided to proceed with a USD/INR Buy/Sell swap auction amounting to USD 5 billion for a duration of three years."

This swap will function as a straightforward buy/sell foreign exchange swap from the RBI's perspective.

In this arrangement, a bank will sell US dollars to the RBI while simultaneously agreeing to repurchase the same amount at the conclusion of the swap period, as clarified by the central bank.

Market participants will need to submit their bids based on the premium they are willing to offer to the RBI for the swap duration, expressed in paisa up to two decimal points.

The auction's cut-off will be determined by the premium offered.

This will be a multiple price-based auction, meaning successful bids will be accepted at their respective quoted premiums.

The minimum bid size for this auction will be set at USD 10 million, with subsequent bids in increments of USD 1 million.