RBI Announces Liquidity Measures via OMO Purchases and FX Swap

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  • Last Updated on 8 December, 2025

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RBI Liquidity Measures OMO FX Swap

Press Release: 2025-2026/1635, Dated: 05.12.2025

1. Introduction

The Reserve Bank of India (RBI) has announced a fresh round of liquidity-enhancing measures, which include Open Market Operation (OMO) purchase auctions and a USD/INR Buy/Sell Swap auction. These initiatives are aimed at supporting market liquidity, addressing volatility, and ensuring smooth functioning of financial markets amid evolving domestic and global conditions.

2. Objective Behind the Liquidity Measures

RBI noted tightening liquidity conditions in recent weeks due to factors such as high currency leakage, government cash balances, and global financial uncertainties. The latest measures are designed to inject durable liquidity into the system, stabilise short-term interest rates, and ensure that banks have sufficient funds to meet credit demand and operational requirements.

3. Details of the OMO Purchase Auctions and FX Swap

Under the OMO purchase program, RBI will buy government securities to infuse rupee liquidity directly into the banking system. Simultaneously, the USD/INR Buy/Sell Swap auction will release dollars into the market while absorbing rupee liquidity temporarily, helping manage foreign exchange pressures. Together, these tools offer a balanced approach to currency management and liquidity stabilisation.

4. Expected Impact on Markets and the Banking System

The liquidity injection is expected to ease short-term money market rates, improve banking system liquidity, and support credit flow to productive sectors. The FX swap mechanism may also help curb undue volatility in the rupee. Financial markets generally view such measures as supportive, as they provide clarity on the central bank’s stance toward stabilising financial conditions.

5. Conclusion

RBI’s announcement of OMO purchase auctions and a USD/INR Buy/Sell Swap auction reflects its proactive approach to managing evolving liquidity dynamics. By using both domestic and foreign exchange tools, the central bank aims to maintain orderly market conditions, ensure adequate liquidity, and reinforce financial system stability. These measures signal RBI’s commitment to responsive and effective monetary management.

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Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied