Which organsation has decided to use a new tool for the first time to enhance liquidity in the system using which it will buy$ 5 billion from the banks in a swap deal that is capable of injecting around Rs. 35, 000 crores into the system?

BANKING GENERAL KNOWLEDGE

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Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]

A	EPFO
B	SEBI
C	Finance Ministry
D	RBI

Explanation:

Detailed explanation-1: -The Reserve Bank of India (RBI) on Tuesday conducted a $ 5 billion dollar-rupee swap auction as part of its liquidity management initiative, leading to infusion of dollars and sucking out of the rupee from the financial system. The central bank’s move will reduce the pressure on inflation and strengthen the rupee.

Detailed explanation-2: -Recently, the Reserve Bank of India (RBI) conducted a USD 5 billion dollar-rupee swap auction as part of its liquidity management initiative. This move will lead to infusion of dollars and sucking out of the rupee from the financial system. This will reduce the pressure on inflation and strengthen the rupee.

Detailed explanation-3: -The central bank in India i.e. the Reserve Bank of India (RBI) uses repo rate to regulate liquidity in the economy.

Detailed explanation-4: -When the RBI wants to inject liquidity into economy, it may adopt the following: (1) Buy the government securities from the banks. (2) Enter into reserve repo operations. (3) Raise cash Reserve Ratio.

There is 1 question to complete.