The Reserve Bank of India reportedly conducted dollar–rupee sell-buy swaps for a second consecutive day as it attempted to absorb surplus money from the banking system.
The excess liquidity followed an unusually large inflow of foreign currency through approximately US$128 billion in NRI deposits collected under an RBI-supported programme. Banks exchanged much of that foreign currency with the central bank for rupees, increasing the volume of domestic money available in the financial system.
Under a sell-buy swap, the RBI sells dollars to banks in exchange for rupees and agrees to reverse the transaction later. The mechanism temporarily removes rupees from circulation without permanently reducing the central bank’s foreign-exchange holdings.
Market participants said the latest transactions included September and December maturities. However, the RBI had not officially disclosed their total value. The figures therefore remain market estimates rather than confirmed central-bank data.
The operations concern liquidity management between banks and the RBI. They do not freeze FCNR accounts, reduce NRI balances or change the contractual interest payable to individual depositors.
