RBI plans three-year dollar–rupee swap to ease tight liquidity
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The Reserve Bank of India (RBI) will inject fresh liquidity into the banking system through a long-term USD/INR Buy/Sell swap auction worth $5 billion, according to the RBI circular issued on December 8, 2025. The operation, scheduled for December 16, 2025, is intended to provide banks with more durable rupee liquidity at a time when system conditions remain tight.
According to the circular issued on December 5, the RBI said that it had already announced a set of liquidity measures, including open market purchase operations of government securities totalling ₹1 lakh crore in two tranches on 11 and 18 December. The upcoming swap sits alongside those operations as part of a broader attempt to keep funding conditions orderly.
The swap will run for a tenor of thirty-six months. Banks will sell US dollars to the RBI on the near leg dated December 18, 2025 and buy them back on the far leg dated December 18, 2028. The auction will be held between 10:30 am and 11:30 am, and only Authorised Dealer Category-I banks may participate, according to the RBI circular.
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The RBI stated that bids must quote the premium banks that are willing to pay for the full swap period, expressed in paisa terms to two decimal places. The RBI will accept bids in descending order of premium until the notified amount is reached, with the cut-off set at the level where the total demand meets the $5 billion limit. Successful bidders will receive allotment at the premium they quoted, with pro-rata allocation possible at the cut-off.
Banks may submit multiple bids, with a minimum bid size of $10 million. Settlement of the first leg will occur on a spot basis, with the RBI crediting rupee funds to banks as they deliver dollars into the central bank’s nostro account, in accordance with the RBI circular.
The auction results will be announced on the same day, and the RBI has reserved the right to accept less—or slightly more—than the notified amount, stated the RBI circular.