RBI's Forex reserves surged by another $ 5.237 billion to rise to $ 411.905 billion, reaping in contributions from the recently culminated Reserve Bank of India's (RBI) first-of-its-kind Dollar-Rupee swap programme, which successfully drew in bids for more than $16 billion against the auction size of $5 billion.
The auction was conducted by the RBI on 26 March 2019, in which RBI, led by its governor Shaktikanta Das had ingeniously tapped the domestic dollar availability to infuse rupee into the system in a bid to boost liquidity, while keeping a tap on the appreciating rupee.
Rupee, which was the worst performing Asian currency just until last year has suddenly turned into the best performing Asian currency. The much volatility in the rupee value and the appreciation does not bode well for the exports which India has been rigorously wanting to expand and increase. In this light, the RBI's novel design of the swap has gained much appreciation from all corners.
Following the huge response, the central bank announced another round of $5 billion swap auction to be held on 23 April 2019 for a three-year tenor, which would further boost the liquidity in the markets. As an ancillary benefit, this would aid the banks to further lower their lending rates, helping the RBI's repeated rate cuts in order to increase the lending activity in the economy.
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