The Reserve Bank of India said on Wednesday that it will inject long-term liquidity of $ 5 billion in banking system under the three-year foreign exchange swap arrangement with banks.
A simple purchase / sale from Swap Reserve Bank will be in the nature of foreign exchange swaps. Under the swap, a bank will sell the US dollar to the RBI and also agree to buy the same amount of US dollar at the end of the swap period.
RBI said, "To meet the requirements of the sustainable liquidity of the system, the Reserve Bank has decided to inject liquidity of long term for long-term buying and selling foreign currency for its liquidity management toolkit."
Market participants said that in the context of the premium, it would be necessary to place their bids so that they are ready to pay the RBI for swap tenure, which will be expressed in paisa terms up to two decimal places.