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The Reserve Bank of India has conducted more than $2 billion in FX swaps over the last two days to offset the drain in liquidity caused by spot dollar sales, four bankers said, suggesting a focus on containing currency pressures without exacerbating banking liquidity tightness.
The central bank has stepped up spot market intervention amid equity outflows, higher demand linked to bullion imports and increased hedging pile up pressure on the rupee. The currency plunged 0.8% on Wednesday to an all-time low of 91.7425.
Spot intervention drains rupee liquidity, an effect the RBI can counter through dollar/rupee buy-sell FX swaps, in which the first leg is settled at the spot date and the second at a future date.
Bankers said the central bank conducted such swaps on Tuesday and Wednesday across various maturities. While views on the total size differed, one banker pegged it at more than $3 billion, with estimates starting at around $2 billion.
The bankers requested anonymity since they were not authorised to speak publicly. The RBI did not immediately respond to an emailed request for comment.
While the RBI regularly uses FX swaps alongside spot intervention, bankers said the volume of buy-sell swaps this week was unusually large compared with past episodes.
“It looks like they (RBI) will have to do it (the buy-sell swaps) on a regular basis, considering how frequently they are needing to intervene (in spot) and the liquidity scarcity,” a senior treasury official at a private sector bank said.
Liquidity in India’s banking system has intermittently slipped into deficit in recent weeks despite the central bank’s bond purchases and FX swap operations. Bankers said cash conditions have come under increasing pressure from spot FX intervention.
Banking system liquidity slipped into a deficit of around ₹6,000 crore ($655.4 million) on Wednesday.
The RBI’s swap lowered dollar/rupee hedging costs, countering the upward pressure on forward premiums that would normally accompany a fall in the currency.
Implied yield on the one-year dollar/rupee premium fell by about 10 basis points over the last two days, slipping further on Thursday.
Published on January 22, 2026
