The Reserve Bank of India (RBI) on Tuesday unveiled a fresh set of liquidity measures, announcing plans to inject nearly ₹3 trillion into the banking system through a combination of open market operations (OMOs) and a foreign exchange buy-sell swap. The move is aimed at easing tightening liquidity conditions and ensuring orderly functioning of financial markets.
In an official release, the central bank said it will purchase Government of India securities worth ₹2 trillion via OMOs, spread across four tranches of ₹50,000 crore each. These auctions are scheduled for December 29, January 5, January 12 and January 22. Additionally, the RBI will undertake a three-year USD/INR buy-sell swap of $10 billion on January 13, which will further add durable rupee liquidity to the system.
The announcement comes against the backdrop of liquidity stress in the banking system. As per the latest available data, net liquidity was in deficit by ₹54,851 crore, reflecting pressure from multiple sources.
Offset to Forex and Seasonal Drains
Market participants said the RBI’s action was widely anticipated, especially after the central bank’s recent intervention in the foreign exchange market through dollar sales to contain volatility in the rupee. Such interventions typically absorb rupee liquidity from the system.
Liquidity conditions have also been impacted by seasonal factors, including advance tax outflows and an increase in currency in circulation during the year-end period. The combined use of OMOs and a longer-tenor forex swap is expected to offset these drains and help stabilise short-term money market rates.
Supporting Financial Stability
Last week, the rupee came under pressure amid global uncertainty, concerns over a potential India–US trade agreement, and persistent foreign portfolio investor outflows from domestic equity and debt markets. The RBI’s intervention, followed by the liquidity infusion, signals a calibrated approach to currency management and liquidity support.
Analysts said the measures underline the RBI’s intent to maintain adequate system liquidity without altering its policy stance, while ensuring smooth credit transmission and financial stability. The central bank reiterated that it will continue to monitor evolving market conditions and deploy appropriate instruments as needed.
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