RBI Announces OMO Purchases and Dollar Rupee Swap to Boost Liquidity

On a review of prevailing liquidity and financial conditions, the Reserve Bank of India on December 23, 2025 announced a fresh set of liquidity infusion measures. These include Open Market Operation purchases of Government of India securities worth ₹2,00,000 crore and a Dollar Rupee (USD/INR) Buy/Sell Swap auction of $10 billion for a tenor of three years, aimed at easing pressures in the banking and foreign exchange markets.

Details of the OMO Purchase Programme

The central bank will conduct OMO purchases of government securities in four equal tranches of ₹50,000 crore each. These auctions are scheduled for December 29, 2025, January 5, 2026, January 12, 2026, and January 22, 2026. Analysts expect the move to inject durable rupee liquidity into the banking system, supporting credit flow and stabilising short-term money market rates amid tight conditions.

Dollar Rupee Swap to Manage Forex Liquidity

In addition to OMOs, the RBI will conduct a Dollar Rupee Buy/Sell Swap auction of $10 billion on January 13, 2026, with a three-year tenor. Market participants believe this step will help absorb excess dollar liquidity, which has contributed to elevated dollar-rupee forward premiums. The swap is also expected to ease pressure on India’s foreign exchange reserves by reducing the need for direct dollar sales in the spot market.

Context of Rupee Pressure and RBI Interventions

The measures come amid sustained pressure on the rupee, partly due to external factors such as U.S. tariff-related concerns. As per RBI data, the central bank sold a net $11.88 billion in the inter-bank foreign exchange market in October 2025 to arrest the rupee’s decline. The latest RBI Bulletin shows total dollar purchases of $17.69 billion and sales of $29.56 billion during the period.

Imporatnt Facts for Exams

• Open Market Operations are used by RBI to manage liquidity.
• OMO purchases inject rupee liquidity into the banking system.
• Dollar Rupee swaps help manage forex liquidity and forward premiums.
• RBI conducts buy/sell swaps without impacting spot reserves immediately.

Liquidity Management Strategy in 2025

To address liquidity needs and foreign exchange volatility, the RBI has already purchased government bonds worth about ₹6.5 lakh crore in 2025. Earlier, on December 16, 2025, it conducted a three-year Dollar Rupee buy/sell swap of $5 billion. The central bank stated that it will continue to closely monitor evolving market conditions and take appropriate measures to ensure orderly liquidity and financial stability.