Banks Push RBI for FX Swap Amid Liquidity Crunch

Such operations could effectively inject rupee liquidity into the financial markets

- Bloomberg

Some big lenders in India have asked the central bank to inject liquidity using foreign-exchange swaps as short-term currency financing costs surged to a four-year high, according to people familiar with the matter.

In recent informal interactions, some lenders asked the Reserve Bank of India to consider using FX swaps, where the parties simultaneously agree to exchange currencies in the spot market and reverse the transaction at a future date, the people said. Such operations could effectively inject rupee liquidity into the financial markets.