RBI is planning more forex swaps, steps to inject money: report

NEW DELHI/MUMBAI: The Reserve Bank Of India (RBI) Is Likely To Lead At Least One More Exchange Rupees For Dollars After The General Elections, The Above Three Officials With Immediate Knowledge Of The Plan, Part Of An Effort To Support Economic Growth.

RBI Also Plans To Conduct Open Market Transactions In The Coming Two Months Up To Rs 50,000 Quantitative Relaxation Program To Spur The Slowing Economy.

Expected These Final Movements Will Put Cash In Financial System And Help To Reduce Interest Rates That May Help Borrowers Where One Interest Rate Reduction Has Not.

" We Want To Make Sufficient Liquidity Available, But We Cannot Open The Floodgates Or Liquidity. It Has Been Done In A Calibrated And Measured Way," Said One Official Who Declined To Be Because Of The Sensitivity Of The Matter.

The Reserve Bank Of India Declined To Comment.

Prime Minister Narendra Modi Is Facing A Tight Re-election Race In The Staggered Poll That Ground On April 11 And Will End On May 19. Votes Will Be Counted On May 23

Economic Growth Slowed To 6.6 Per Cent In The October-December Quarter, The Sausage In Five Quarters, And Economists See A Further Slowdown In January-March Due To High Interest Rates And Surging Oil Prices.

Despite Cutting Its Key Policy Rate By 50 Basis Points This Year To 6 Per Cent, The RBI Struggled To Get Banks To Reduce Lending Rates Due To Tight Cash Conditions And High Deposit Rates.

The RBI Wants The Real Interest - The Delta Between The Inflation Rate And The Rate People Pay To Borrow - To Ease For Borrowers, A Separate Government Official Said.

In May The RBI Announced A Fresh Round Of Open Market Operations To Purchase A Total Of Rs 25,000 Crore Worth Of Bonds, With The First Auction For Rs 12,500 Crore Hero On May 2.

" There Could Be Two To Four More Open Market Operations By The RBI In The Next Two Months (June-July) Or Similar Quantum," The Second Official Said.

" We're Also In Discussions For More Forex Swaps After The Elections," He Added.

A Third Official Said The RBI Would Probably Review The Amount Of Rupees In Circulation In June And Determine The Liquidity Required By The Banking System Before Finalizing Details Of The Rupees For Dollar Swap Auction.

The RBI's Two $ 5 Billion Buy/sell Swap Auctions In March And April Together Injected Close To Rs 70,000 Crore Into The Banking System, Which Bank Officials Hoped Would Enable Banks To Lower Interest Rates For Borrowers.

" It Cannot Be Loose Money That You Give To The Market. Liquidity Infusion Will Be Done As Per Market Requirement," The First Official Said.