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RBI has announced a US Dollar/Rupee two-year sell-buy swap auction.It will conduct a sell/buy swap auction for how many billion Dollar on March 8, 2022?

RBI has announced a US Dollar/Rupee two-year sell-buy swap auction.It will conduct a sell/buy swap auction for how many billion Dollar on March 8, 2022? Correct Answer 5

The correct answer is $5 billion.

Key Points

  • RBI has announced a US Dollar/Rupee two-year sell-buy swap auction.
  • It will conduct a sell/buy swap auction for $5 billion on March 8, 2022, a move that will help rationalise plunging forwards premia and level out the rupee liquidity.
  • In the first leg of the transaction, the banks will buy US dollars from RBI at the reference rate of the auction date.

Important Points

  • The auction will be multiple-price-based, i.e., successful bids will be accepted at their respective quoted premiums.
  • The swap will be in the nature of a simple sell/buy foreign exchange swap from the RBI side.
  • A bank will buy US Dollars from the Central bank and simultaneously agree to sell the same amount of US Dollars at the end of the swap period.
  • The auction cut-off will be based on the premium amount in paisa terms up to two decimal points. 

Additional Information

  • RBI:
    • Governor - Shaktikanta Das.
    • Headquarters - Mumbai.
    • Founded: 1 April 1935, Kolkata.
    • The Bank publishes two statutory reports, the Annual Report of the Bank and the Report on Trend and Progress of Banking in India.
    • It also publishes Financial Stability Report.

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