Indian rupee forwards retreat after RBI unveils FX swap

Rupee forward premiums ‍pulled back from multi-year peaks on Wednesday ⁠as traders drew comfort from the central bank's dollar-rupee buy/sell swap, which is ‌expected to ‌siphon off excess dollar liquidity, helping cool ‌a sharp run-up in premia.

The USD/INR January month-end forward premium eased to 41 paisa, down from a peak of 58 paisa hit on Tuesday. Similarly, the November ‌month-end ‍premium retreated to 240 paisa, ‍pulling back from a peak of ‌278 paisa.

A glut of dollar liquidity combined with year-end balance sheet constraints had powered a sharp surge in forward premiums in recent sessions, prompting bankers ‍to urge central bank intervention via buy/sell swaps.


The Reserve ‍Bank of ⁠India ⁠announced after market hours on Tuesday that it would conduct a 3-year $10 billion USD/INR buy-sell swap next month, as part of its broader measures to manage liquidity in the banking system.