Adedokun Waliyu 
The Indian central bank did not roll over and took delivery of the $5 billion dollar/rupee swap that matured on Monday, aiming to bolster foreign exchange reserves and rupee liquidity, four bankers said.
The Reserve Bank of India’s dollar/rupee sell-buy swap conducted in March 2022 matured on Monday. The central bank had the option to take delivery of the swap, roll it over entirely, or opt for a partial rollover.
Bankers reckon that the central bank opted to take delivery, thereby removing $5 billion out of the system and injecting proportionate liquidity.
“In all likelihood, it seems that the RBI has taken delivery of the swap,” said Ritesh Bhusari, joint general manager for treasury at South Indian Bank.
The rupee infusion will help the RBI in better managing the rupee liquidity situation ahead of tax outflows, Bhusari said.
Advance tax outflows on March 15 and the GST outflows around March 20 are expected to take out about 2.5 trillion rupees ($30.23 billion), according to traders.
“RBI likely took delivery. It ticks off two boxes – forex reserves and rupee liquidity,” Dhiraj Nim, forex strategist at ANZ, said. He pointed out that dollar liquidity is not currently a concern as inflows are healthy, while rupee liquidity remains tight.
The RBI did not immediately reply to an email seeking comment.
The RBI’s purported move to take delivery of the swap will further boost India’s forex reserves, which are already at a two-year high. India’s forex reserves stood at $625.6 billion as on March 1, according to data published by the central bank.
The data, which will include the changes in forex reserves due to the swap maturity, will be released on March 22.
The change in reserves resulting from the swap delivery may not precisely match the $5 billion amount, a senior treasury official at a private bank explained.
The RBI supplied dollars last Thursday and on Monday via spot over March swaps, which would have an impact on the headline reserves, he said.
