MUMBALI: The Indian central bank did not roll over and took delivery of the $5 billion dollar/ rupee swap that matured on © Monday, aiming to bolster foreign exchange reserves and rupee liquidity, four bankers said. The Reserve Bank of India’s dollar/rupee sell-buy swap conducted in March 2022 matured on Monday.
The central bank had the caption to take delivery of the swap, roll it over entirely, or opt for a partial rollover. Bankers reckon that the central bank optcd to take delivery, thereby removing $5 billion out of the system and injecting pro-. portion ate liquidity. “In all likelihood, it seems that the BBI has taken delivery of the swap,” said Ritesh Bhusari, joinr general manager for treasury at South Indian Bank.
The rupee infusion will help the RBI in better managing the rupee liquidity situation ahead of tax outflows, Bhusari said. Advance tax outflows on March 15and the GST outflows around March 20 are expected to take out about 2.5 lakh crove ($30.23 billion), -according to traders. “RBI likely took dehvoty It ticks off two boxes - forex reserves and rupee liquidity,” Dhiraj Nim, forex strategist at ANZ, said. He pointed out that dollar liquidity is not currently a concern as inflows are healthy, while rupee liquidity. remains tight.
The RBI did not immediately reply to am email seeking comment. The RBI's purported move to take delivery of the swap will further boost India’s forex reserves, which are already at a two-year high. India’s forex MINT reserves stood at $625.6 billion as on March 1, according to data published by the central bank. The data, which will include the changes in forex reserves due to the swap maturity, will be released on March 22. The change in reserves resulting from the swap delivery may not precisely match the $5billion amount, a senior treasury official at a private bank explained.
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