RBI schedules $5B USD/INR swap auction Dec 16 to inject liquidity

• RBI to conduct $5 billion USD/INR buy/sell swap auction on December 16.
• The auction will have a 36-month tenure, with the near leg on Dec 18, 2025, and far leg on Dec 18, 2028.
• The mechanism involves RBI buying USD from banks for Rupees and selling them back later with a premium.
• The auction aims to inject durable liquidity into the banking system, estimated at Rs 45,000 crore.
• This liquidity injection is expected to ease overnight rates and aid in the transmission of repo rate cuts.

Why It Matters: RBI's swap injects liquidity, easing rates, and aids monetary policy transmission.