RBI Said to ease rupee drought with FX swaps
The Reserve Bank of India used dollar-rupee swaps to inject $3 billion worth of rupee liquidity to ease a financial squeeze. This move was made to counteract a tightening of rupee liquidity due to tax settlements and stock purchases. However, this action adds pressure to the rupee which has been losing value against the dollar.
India’s central bank is using dollar-rupee swaps to ease a liquidity squeeze in the country’s financial system, according to people familiar with the matter.
The Reserve Bank of India used swaps to inject rupee liquidity worth around $3 billion on Friday, the people said, asking not to be named because they aren’t authorized to speak publicly on the matter. The swaps had maturities of three, six and 12 months, they said. The RBI didn’t immediately respond to an emailed request for comment.
The central bank was attempting to reduce the pain of a recent tightening of rupee liquidity in India, which has been fueled by a rush for the local currency as corporations settle their tax bills and investors borrow cash to buy shares.
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