RBI's USD/INR Swap Auction Overwhelmed: Accepts $5.07 Billion Amidst Double Bids

• The Reserve Bank of India (RBI) received bids worth $10.35 billion, more than double the target, at its USD/INR Buy/Sell Swap Auction.
• RBI accepted bids totaling $5.07 billion, with a cut-off premium of 765 paisa.
• The auction, which had a bid-to-cover ratio of 2.07, indicates strong demand for the swap.
• This 36-month swap mechanism aims to inject approximately Rs 45,000 crore liquidity into the banking system.
• The move is expected to ease overnight rates and improve the transmission of repo rate cuts.

Why It Matters: RBI's USD/INR swap auction successfully injected $5.07 billion liquidity, easing banking system rates.