Archive · 24 Sep 2026
RBI Conducts $10 Billion Forex Swaps to Drain Liquidity
The Reserve Bank of India is trying to remove extra money from banks.
It reportedly did this by swapping dollars for rupees worth at least $10 billion.
The banks give the RBI rupees now and will receive them back later.
This temporarily reduces the amount of rupees available to lend.
The transactions lasted from about one month to six months.
Banks had received a very large amount of cash after more than $140 billion entered the country through foreign-capital measures.
Too much available cash can push borrowing costs down and increase inflation risks.
The RBI also used bond sales to manage the surplus.
The central bank did not comment on the reported swaps.
The Reserve Bank of India reportedly conducted at least $10 billion in sell-buy currency swaps over the past two weeks.
The swaps had maturities ranging from one month to about six months, according to people familiar with the transactions.
By selling dollars for rupees and reversing the trades later, the RBI removes rupee liquidity from banks.
Banking-system surplus liquidity reached a record ₹11 lakh crore, or about $115 billion, earlier this month.
Foreign-capital-attracting measures brought in more than $140 billion, while the RBI also used bond sales to manage excess cash.
- Who
- The Reserve Bank of India, Indian lenders, and people familiar with the transactions.
- What
- The RBI reportedly conducted at least $10 billion in sell-buy foreign-exchange swaps to drain rupee liquidity.
- When
- Over the past two weeks, with swap maturities ranging from one month to about six months.
- Where
- India’s banking and financial system.
- Why
- To manage surplus cash and reduce inflation risks associated with excess liquidity and high oil prices.
- Reported swap value
- At least $10 billion
- Transaction type
- Sell-buy currency swaps
- Swap maturities
- One month to about six months
- Record surplus liquidity
- ₹11 lakh crore, or about $115 billion
- Foreign capital inflows
- More than $140 billion
- Other liquidity tool
- Bond sales
- Typical public auction size
- About $3 billion to $5 billion