RBI’s USD 5 Billion INR/USD Buy-Sell Foreign Exchange Swap Auction – Scheduled for May 26, 2011.
Key Details of the USD-INR Swap Auction
RBI in its circular has stated that Reserve Bank is conducting auction for USD/INR buy/sell foreign exchange swap to meet the current / evolving liquidity conditions in the market. The auction for 3 years tenor is scheduled on 26th May, 2016 to infuse huge amount of liquidity in the system over long term.
A buy/sell foreign exchange swap is a transaction where a bank sells US$ to the Reserve Bank and agrees to repurchase same on maturity of the swap period agreed to.
Bids will have to indicate bid premium offered by the bidder in paisa and up to two decimal places.
Cut-off price for the auction will be the quoted premium of bids received by Reserve Bank from participating banks in the auction. Bids will be dealt with through multiple price system and all participating banks who bid in the auction will be allocated at the premium quoted by them.
Minimum Bid Amount Minimum bid of USD 10 mn and in multiples of USD 1 mn thereafter.
Conclusion
RBI is trying to protect Indian currency against falling dollar value and also to control the international fiscal deficit. Please stay tuned to this space as the auction date gets closer and we shall post more updates on the auction event.