The Reserve Bank of India's long-term dollar-rupee buy-sell swap saw strong demand, and was oversubscribed 1.6 times, but the cut off premium was lower than expected, adding further weakness in the rupee's exchange rate, traders said.
The foreign exchange swap, which had a notified amount of $10 billion, received bids worth $16.23 billion and will have a premium of 655.1 paisa. The RBI accepted $10.06 billion. The transaction will be reversed in March 2028.
In the buy-sell swap, the RBI buys dollars in exchange for rupees, hence infusing liquidity into the system. In the second leg of the transaction in March 2028, the RBI will sell back the $10 billion to the market at the forward rate, which is the currency exchange spot rate at that time, plus 655.1 paise
"Markets were expecting a premium of about 672 paisa, but the RBI bought it down to 655 paisa. After this, forward premiums fell and the rupee weakened towards 87.52/$1 levels," said Anil Bhansali, head of treasury at Finrex Treasury Advisors.
Intervention by the RBI strengthened the rupee towards 87.28/$1 levels for sometime, before closing at 87.50/$1, traders said. Market participants were expecting the foreign exchange swap to add to the weakness in ..
Source Name : Economic Times