The Reserve Bank of India (RBI) on Wednesday announced a $5-billion dollar-rupee buy/sell swap auction with a three-year tenor to inject durable liquidity into the banking system, as it grapples with tightening domestic liquidity conditions and mounting pressure on the rupee amid elevated crude oil prices. The auction, scheduled for May 26, will allow banks to sell dollars to the RBI in exchange for rupees, with an agreement to reverse the transaction at a pre-determined exchange rate at a future date. The move is expected to infuse roughly 42,000-43,000 crore into the banking system. Analysts said the swap mechanism enables the RBI to simultaneously manage currency volatility and domestic liquidity without resorting to a formal policy rate cut. Due to the self-reversing nature, banks will receive rupee liquidity immediately, while the RBI adds to its foreign exchange reserves for the tenor of the swap.