The Reserve Bank of India is evaluating multiple measures to curb the Indian Rupee's decline, sources told NDTV Profit on Thursday.
According to the sources the Central Bank multi-pronged measures include launch of Foreign Currency Non-Resident or FCNR deposits, issuance of NRI bonds, and may also consider more Rupee-Dollar buy/sell swaps.
However, they added that all of these measures are currently in the deliberation stage and no final decision has been made yet.
ALSO READ: RBI To Conduct $5-Billion Sell, Swap Auction To Inject Liquidity Amid Forex Concerns
RBI's $5-Billion Sell, Swap Auction
On Wednesday, the Bank announced that it will conduct a $5 billion buy/sell/swap auction to inject liquidity into the financial system on May 26.
The auction is slated to take place from 10:30 a.m. to 11:30 a.m. and will have a tenor of three years, according to the central bank's official release.
RBI uses the swap mechanism to inject rupee liquidity into the banking system while simultaneously managing foreign exchange reserves.
According to the release, the swap is in the nature of a "simple buy/sell foreign exchange swap" from the Reserve Bank side, wherein a bank shall sell US dollars to the Reserve Bank and simultaneously agree to buy the same amount of US dollars at the end of the swap period.
ALSO READ: Rupee's Regional Rout: India Unit Trails 10% Against Pakistan, Bangladesh Currencies
Rupee's Historic Slide
The Indian currency's historic decline has been triggered by a combination of elevated crude, firm US yields and persistent dollar demand. Rupee's rout reached an all-time low of 96.96 per dollar on Wednesday after opening at 96.85 levels. It settled at record closing low of 96.83 against the Greenback. Reports indicated that the Reserve Bank of India's intervention provided some respite.
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