The Reserve Bank of India (RBI) conducted a $5 billion USD/INR Buy-Sell Swap on December 16, 2025, as part of its coordinated liquidity management and forex stabilisation strategy. This was a 3-year swap agreement under which the RBI bought US dollars from banks in exchange for rupees, with a commitment to sell those dollars back at a specified future date at a predetermined rate.

In a Buy-Sell Swap, the RBI receives dollars today from banks (which strengthens dollar supply in the market) and provides rupees in return (injecting rupee liquidity into the banking system). At the end of the swap tenor (three years), the transaction reverses — the RBI returns dollars to banks and receives rupees back. This mechanism simultaneously addresses two objectives: injecting rupee liquidity into the banking system and providing dollar liquidity to the foreign exchange market.

The December 16 swap complemented the RBI's broader December 2025 monetary easing package, which included Open Market Operations (OMO) purchases of ₹1 lakh crore and the repo rate cut to 5.25%. Together, these measures aimed to ease credit conditions, support economic growth, and stabilise the rupee at a time when global dollar strength and trade uncertainty were putting pressure on emerging market currencies.

The swap is also significant from a forex reserve perspective. India's forex reserves had come under pressure in late 2025, and currency swaps are a tool to support reserves without directly drawing them down. The RBI has used USD/INR swaps periodically — notably the $5 billion swap in 2019 — as part of its liquidity management toolkit. For aspirants, this topic connects monetary economics (Paper I, Unit 2) with external sector economics and forex management.