RBI to inject more liquidity

RBI to inject more liquidity



Swapping Arrangement

  • Reserve Bank of India, the country’s regulator has announced that it will be injecting a long-term liquidity worth USD 5 billion into the system.
  • This will be done through a Foreign Exchange Swap arrangement with banks for three years.
  • The Swap will be in the nature of a simple buy/sell foreign exchange swap from the Central Bank’s side.

Modus operandi

  • Under the SWAP system, a bank would sell US dollars to the RBI and
  • Simultaneously agree to buy the same amount of US dollars at the end of Swap period.

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