Bengaluru: The Reserve Bank of India (RBI) on Monday said it would conduct another round of dollar-rupee buy-sell swap of $5 billion for a tenure of three years on 23 April, its second such auction within a month. The new swap auction tool is meant to provide the central bank greater flexibility in managing banking system cash, while helping soak up any potential large dollar inflows that could make the rupee rise sharply. This comes shortly after RBI said last month it will conduct a dollar-rupee swap auction of $5 billion for a tenure of three years on 26 March, the first such market sale by the central bank to mop up dollars and pump in rupees. In the first round of forex swap, the central bank set a premium of ₹7.76 and accepted the entire planned $5 billion on sale. In 2013, then central bank governor Raghuram Rajan announced a similar forex swap arrangement at a subsidised market rate to attract dollars and prevent the rupee's free fall during India's worst currency crisis since 1990s.

Source: Mint April 01, 2019 12:56 UTC