The Reserve Bank of India’s $5-billion dollar-rupee swap auction on Tuesday drew bids worth nearly double the notified amount, even as the rupee came under renewed pressure amid escalating geopolitical tensions in West Asia and rising crude oil prices.
The RBI said it received bids worth $9.8 billion against the notified amount of $5 billion in the three-year dollar-rupee buy/sell swap auction announced on May 20. The central bank accepted bids worth the full notified amount at a cut-off premium of 910 paise.
The auction received 254 bids, translating into a bid-cover ratio of 1.96 times, of which 141 bids were accepted. The weighted average premium of accepted bids stood at 920.64 paise, while partial allotment at the cut-off premium worked out to 18.10 per cent. Both the first and second leg settlements are scheduled for May 29.
The swap is aimed at injecting durable rupee liquidity into the banking system while helping the RBI manage forex reserves and forward market pressures. Under the mechanism, banks sell dollars to the RBI and simultaneously agree to buy back the same amount after three years.
The auction comes at a time when the rupee has been under severe pressure due to rising oil prices and heightened tensions involving Iran. The domestic currency on Tuesday fell 44 paise to close at 95.70 against the US dollar after touching an intra-day low of 95.76 in the interbank market. On Monday, the rupee had gained 34 paise to settle at 95.26 aided by RBI intervention.
Forex traders attributed the latest fall in the rupee to higher crude prices, a stronger dollar and weak domestic equities. Brent crude prices rose over 3 per cent to nearly $100 a barrel following reports of fresh US attacks on Iran, offsetting hopes of a diplomatic breakthrough over the Strait of Hormuz.
The dollar index, which measures the greenback against a basket of six currencies, was trading lower at 99.05, though the US currency remained firm overall. Domestic equity markets also weakened sharply, with the Sensex falling 479 points to close at 76,009.70 and the Nifty declining 118 points to 23,913.70.
The RBI has increasingly relied on forex swaps since 2025 as the rupee came under sustained pressure. The Indian currency had weakened nearly 8 per cent in 2025, making it the worst-performing Asian currency during the period. In FY26, the RBI reportedly sold a record $53 billion in the spot market to defend the rupee.
