2019
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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$2 billion
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$4 billion
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$5 billion
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$7 billion
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Detailed explanation-1: -The RBI’s planned forex swap auction went through smoothly. The central bank said it received bids worth $13.56 billion for the sell/buy auction. It accepted 86 of these bids for $5.135 billion. The cut-off premium was set at 656 paise.
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 Reserve Bank of India (RBI) has signed a Currency Swap Agreement with the Maldives Monetary Authority (MMA) under the SAARC Currency Swap Framework. This is to provide swap support as a backstop line of funding for short term foreign exchange liquidity requirements.
Detailed explanation-4: -What happens when the RBI sells dollars? It results in extinguishing an equivalent amount in rupees, thus reducing the rupee liquidity in the system. The central bank sells off a part of its US dollar reserves and asks for INR in lieu.