New Delhi, May 20 -- The Reserve Bank of India (RBI) on Wednesday announced a USD 5 billion dollar-rupee swap auction aimed at injecting long-term liquidity into the banking system amid pressure on the rupee and foreign investor outflows.

In simple terms, the move will allow banks to give US dollars to the RBI in exchange for rupees for a fixed period, helping improve the availability of funds in the banking system.

The RBI said it will conduct a USD/INR Buy/Sell swap auction of USD 5 billion for a tenor of three years on May 26.

The central bank added that the move has been taken "to meet the durable liquidity needs of the system."

Under the arrangement, banks will sell US dollars to the RBI and receive rupees in return. After three ...