RBI uses currency swaps to drain $115 billion cash surplus

India's central bank is using currency swap operations to drain excess cash from the financial system. The Reserve Bank of India sells dollars in exchange for rupees, reducing rupee liquidity in circulation.

The move follows record inflows that had pushed surplus funds to 11 trillion rupees. RBI's liquidity management aims to control inflation risks that could arise from cheaper borrowing costs in an over-liquid system.