The second dollar-rupee swap auction by the Reserve Bank of India on Tuesday received a total of 255 bids worth $18.65 billion. It had put a total of $5 billion on offer for a tenure of three years.

According to RBI data, the cut-off premium has been set at ₹8.38, which is the threshold for banks to receive any allotment. About ₹34,874 crore of rupee liquidity will be injected into the system in the first leg, it further said.

The RBI also announced on Tuesday that it would purchase government securities under Open Market Operations for about ₹25,000 crore in May.

The RBI had, on March 26, conducted the first forex swap auction to meet the liquidity requirements ahead of the general elections and close of fiscal year 2018-19.

At the time, it had put on offer a similar $5.02 billion, and had received a total of 240 offers worth $16.31 billion. The response prompted the RBI to announce another forex swap auction for April 23.

The tool allows the RBI to inject liquidity into the system, while also enabling it to absorb large inflow of US dollars that could lead to a sharp rise in the rupee.

“In order to meet the durable liquidity needs of the system, the RBI has decided to inject rupee liquidity for longer duration through long-term foreign exchange buy/sell swap in terms of its extant liquidity management framework,” the RBI had said at the time, adding that the US dollar amount mobilised through this auction would also reflect in the RBI’s foreign exchange reserves for the tenor of the swap, while also reflecting in the central bank’s forward liabilities.

Meanwhile, in a separate release, the RBI announced that it would purchase government securities under its OMO programme for about ₹25,000 crore in May.

This has been decided based on a review of the evolving liquidity conditions and assessment of durable liquidity needs going forward, it said.

The purchase would be through two auctions of ₹12,500 crore each, with the first auction scheduled to be conducted on May 2.

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