RBI to conduct USD-INR swap auction of $10 bn for 3 years’ tenor to inject liquidity To meet durable liquidity needs of the banking system, the Reserve Bank of India (RBI) has decided on Friday (February 21) to inject rupee liquidity for longer duration through long-term USD-INR buy/sell swap auction. The Reserve Bank of India (RBI), as part of its monetary policy interventions, executes the swap auctions. How It Works? First Leg (Buy Phase): Banks sell USD to RBI and receive Indian Rupees (INR). Reverse Leg (Sell Phase): Banks buy back USD from RBI at a pre-determined price at the end of the swap period. Impact on the Indian Economy: — Improves Banking Liquidity: Injects Rs 86,000 crore into the banking system, addressing the current liquidity shortfall of Rs 1.7 lakh crore. — Strengthens the Rupee: Reduces depreciation pressure on INR due to forex market fluctuations. — Supports Economic Growth: Enables banks to lend more to businesses and industries, promoting investment and consumption.