The Reserve Bank of India has recently swapped foreign currencies to the tune of at least $10 billion to siphon cash from the financial system and lower inflation risk from surplus money, Bloomberg News reported Thursday, citing people familiar with the move.
The report said over the last two weeks, the country's central bank and lenders engaged in sell-buy swaps, which included transactions with term maturities ranging from one and up to six months. RBI sold dollars to banks for rupees and agreed to reverse the deal at a later date, thereby draining the system's coffers for rupees.
People familiar with the matter told Bloomberg that the dollar-rupee contract rates expiring in three to six months have gone up in September, which reflects RBI's activity.
(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)