The USD/INR Buy/Sell Swap auction and the purchase of Government Securities (G-Secs) are the two Open Market Operations (OMOs) that make up this initiative
Concerning OMO (Open Market Operations)
By buying or selling G-Secs on the open market, the RBI can influence the money supply and interest rates in an economy.
When G-Secs are purchased on the open market, the high powered money (H) increases; however, when they are sold on the open market, it decreases by the same amount. High-powered money is the sum of the public's currency (coins and notes) and commercial bank reserves.
Concerning auctions of US dollars and Indian rupees
Under it, a bank agrees to buy the same quantity of US dollars at the conclusion of the swap period and sells US dollars to the RBI. Each bank quotes their swap rates (forward premium or discount) during an auction, and the program begins by accepting the lowest bidder.
The necessity of a liquid infusion
Banking system has experienced liquidity challenges since November 2024, due to factors such as tax outflows, significant foreign portfolio investor selling in Indian equities, RBI intervention in forex markets, etc.
Generally speaking, favorable liquidity conditions promote economic growth, guarantee policy transmission, and improve loan rate pass-through.
Additional Liquidity Infusion Devices
Quantitative instruments include the Bank Rate, the Statutory Liquidity Ratio (SLR), the Cash Reserve Ratio (CRR), and the Liquidity Adjustment Facility (Repo and Reverse Repo).
Qualitative instruments include Margin Requirement, Selective Credit Control (SCC), Moral Persuasion, and Credit Rationing.
India set to top G20 growth charts through 2026: Report
Solver gang fakes Aadhaar to hijack police constable exam in Madhya Pradesh
Delhi govt marks 100 days with major education reforms
CSIR UGC NET June 2025: Application window open till June 23
Delhi schools to lead clean-up awareness drive under 'Maa Yamuna Swachhta Abhiyan’
India set to top G20 growth charts through 2026: Report
Solver gang fakes Aadhaar to hijack police constable exam in Madhya Pradesh
Kohli rises at midnight as RCB conquers IPL 2025 trophy after years of heartbreak
‘Losses don’t matter’: India’s top General breaks silence on Operation Sindoor losses
Shreyas Iyer outsmarts Bumrah to power Punjab Kings into IPL 2025 final
India set to top G20 growth charts through 2026: Report
Solver gang fakes Aadhaar to hijack police constable exam in Madhya Pradesh
Delhi govt marks 100 days with major education reforms
CSIR UGC NET June 2025: Application window open till June 23
Delhi schools to lead clean-up awareness drive under 'Maa Yamuna Swachhta Abhiyan’
India set to top G20 growth charts through 2026: Report
Solver gang fakes Aadhaar to hijack police constable exam in Madhya Pradesh
Kohli rises at midnight as RCB conquers IPL 2025 trophy after years of heartbreak
‘Losses don’t matter’: India’s top General breaks silence on Operation Sindoor losses
Shreyas Iyer outsmarts Bumrah to power Punjab Kings into IPL 2025 final
Copyright© educationpost.in 2024 All Rights Reserved.
Designed and Developed by @Pyndertech