The RBI’s Dollar-Rupee Swap Auction is a tool to manage the forex liquidity and stabilize the rupee value. The central bank announced a six-month swap period for this auction. As per the swap, RBI would give $2 billion (in exchange for the Indian rupee) to banks who wish to enter. This would infuse dollars into the market and improve liquidity. Also, banks with a significant outflow of dollars can replenish their reserves. However, this was a sell-buy swap deal. It means that simultaneously, the two parties entered into a contract where this transaction was reversed after six months. Here, the banks would sell the US dollars for INR to the RBI, who promised to buy it from them. Therefore, this move was able to normalize the effects of global turmoil and minimize the impact on Indian financial markets.