Hindi English Translation || Editorial || ​Necessary infusion: On the RBI’s currency swap

​Necessary infusion: On the RBI’s currency swap

The RBI’s long-term currency swap (मुद्रा विनिमय) was likely forced by financial volatility (वित्तीय अस्थिरता)

The Reserve Bank of India’s (RBI) recent decision to inject (introduce, instil, bring in, infuse, imbue, inculcate) an additional $10 billion into the financial system through a dollar/rupee swap auction is a timely (समय पर, समयोचित) measure (उपाय, कदम) aimed at addressing (tackle, deal with, attend to, try to sort out) long-term liquidity concerns among domestic lenders (ऋणदाता, उधारदाता). These concerns stem from (उत्पन्न होना, निकलना) a flight (पलायन, प्रस्थान) of foreign capital (विदेशी पूंजी) from Indian stock markets (शेयर बाजार, प्रतिभूति बाजार), as investors seek (try, aim, attempt) better returns in the United States amid (के बीच, के दौरान) President Donald Trump’s proposed corporate tax cuts (a reduction in the tax rate that companies pay on their profits. This can cause higher profits for firms, which can be invested in the stock market or used to buy back shares) and ongoing (जारी, चल रहा) tariff wars, which have strengthened the U.S. dollar against global currencies. This marks (indicate, signify, represent) the second such rupee infusion in less than a month. However, unlike the first tranche (part, section, portion (of something)) of $5 billion on January 31, which had a six-month tenor (the general content/meaning), the latest swap auction has a three-year duration. The combined effect of these two auctions will inject approximately ₹1.3 trillion into the banking system, as lenders deposit their dollar reserves (a foreign currency that is held in significant quantities by central banks or other monetary authorities) with the RBI in exchange (in return (for)) for rupees at a pre-determined (पूर्वनिर्धारित) buyback (पुनर्खरीद, वापस खरीदना) premium. Currency swaps are among the tools (mechanism, means, instrument, apparatus) central banks deploy (employ/bring into effective action; bring into service; have recourse to; use, utilize, employ, make use of, take advantage of) during periods of high volatility in the global financial system. These measures have the primary aim of stabilising the local currency, mitigating (कम करना, घटाना) liquidity constraints (restriction, limitation, restraint) in the domestic financial system, and curbing (control, contain, constrain, restrict, limit) inflationary (मुद्रास्फीति) pressures. Economists estimate that an additional $5 billion infusion may be necessary to neutralise (eliminate, cancel out, nullify/invalidate) the ₹1.7 trillion liquidity ((in the banking system) it refers to readily available cash that banks need to meet short-term business and financial needs) deficit (deficiency, shortage, shortfall, inadequacy) in India’s banking system as of (from (a specified time)) February 20, 2025.

This is the second time that the RBI has conducted a long-duration currency swap. The first was in 2019, in response to global financial volatility during Mr. Trump’s first term (tenure, period of/in office; period, time, stint, spell), amid trade tariff (a tax imposed by one country on the goods and services imported from another country) tensions (strained relations, strain, unease) and tax cuts. However, unlike 2019, when India’s foreign exchange (the conversion of one currency into another at a specific rate known as the foreign exchange rate. The conversion rates for almost all currencies are constantly floating as they are driven by the market forces of supply and demand) reserves were rising, ensuring dollar availability while rupee liquidity remained constrained, today’s situation is more challenging. Between October 2024 and February 21, 2025, the rupee has depreciated (decrease, decline, drop/lose value) approximately 3.3% against the dollar, breaching (break, violate, fail to comply with) the 85 per dollar mark (level, point, stage) on December 19, 2024. Foreign portfolio investors (Investors investing in financial assets, such as shares, government bonds, corporate bonds, convertible securities, infrastructure securities etc. in a foreign country) and foreign institutional investors (companies established or incorporated outside India and make proposals for investments in India. These include hedge funds, pension funds, mutual funds and insurance companies) have also withdrawn roughly $31 billion from Indian equity markets (stock market, securities market, share market (a stock is a security, but every security is not a stock)). Since December 2024, the RBI has sold an estimated $111.2 billion (about 18% of its foreign exchange reserves) to stabilise the rupee. Given (considering, taking into account, bearing in mind) these conditions, the latest long-term currency swap appears to be a necessity (essential requirement, prerequisite, necessary, indispensability) rather than (instead of) a proactive (energetic, motivated, farsighted, cautious, careful) measure. Indian banks must capitalise on (take advantage of, use, make use of, benefit from) this liquidity infusion by continuing to extend credit (a type of loan or line of credit extended to individuals or businesses by financial institutions. It is the ability to borrow money or goods from a lender in exchange for repayment at a later date), ensuring that the cycle (series, sequence, run) of capital investment (it involves allocating resources to acquire or upgrade long-term assets like property, machinery, or technology for the business. The money used by a business to purchase fixed assets, such as land, machinery, or buildings), employment generation, wage growth, and consumer demand remains intact. This, in turn (in return, in response; successively, in succession), could help propel (to cause something to move forward; spur, drive, prompt, precipitate, impel) India’s real GDP growth beyond the current 6.4%, despite prevailing (enduring, persistent, long-standing, perennial, long-term, lasting, long-lasting, continuing) global economic headwinds ((in business) situations or conditions that make growth harder/difficult).

Courtesy: The Hindu

Important Word List With Meaning

1.currency swap (noun)

Hindi Meaning - मुद्रा विनिमय
English Meaning - a currency swap contract (also known as a cross-currency swap contract) is a derivative contract between two parties that involves the exchange of interest payments, as well as the exchange of principal amounts in certain cases, that are denominated in different currencies.

2.financial volatility (noun)

Hindi Meaning - वित्तीय अस्थिरता
English Meaning - a measure of the variation in the price of an asset over time.

3.timely (adjective)

Hindi Meaning - समय पर, समयोचित
English Meaning - prompt, well timed, at the right time, opportune, appropriate.

4.measure (noun)

Hindi Meaning - उपाय, कदम
English Meaning - action, step, procedure.

5.inflationary (adjective)

Hindi Meaning - मुद्रास्फीति
English Meaning - tending to cause monetary inflation.

6.lender (noun)

Hindi Meaning - ऋणदाता, उधारदाता
English Meaning - a business or financial institution that extends credit (loan) to companies and individuals, with the expectation that the full amount of the loan will be repaid.

7.stem from (verb)

Hindi Meaning - उत्पन्न होना, निकलना
English Meaning - emerge, come out, ensue, originate, emanate from.

8.flight (noun)

Hindi Meaning - पलायन, प्रस्थान
English Meaning - exit, departure, disappearance, vanishing, fleeing, escape.

9.foreign capital (noun)

Hindi Meaning - विदेशी पूंजी
English Meaning - inflow of capital in home country from abroad.

10.stock market (noun)

Hindi Meaning - शेयर बाजार, प्रतिभूति बाजार
English Meaning - equity market, share market, a stock exchange. It is where traders buy and sell shares of companies on a public exchange.

11.amid (preposition)

Hindi Meaning - के बीच, के दौरान
English Meaning - in the middle of, surrounded by; during.

12.ongoing (adjective)

Hindi Meaning - जारी, चल रहा
English Meaning - current, existing, continuing.

13.pre-determined (advantage)

Hindi Meaning - पूर्वनिर्धारित
English Meaning - fixed, prearranged.

14.buyback (noun)

Hindi Meaning - पुनर्खरीद, वापस खरीदना
English Meaning - (share) repurchase, re-acquisition.

15.mitigate (verb)

Hindi Meaning - कम करना, घटाना
English Meaning - reduce, diminish, decrease, lessen, relieve, assuage, alleviate, allay, temper, moderate.

16.infusion (noun)

English Meaning - the introduction/ instilling/imbuing of a new thing.

17.capital infusion (noun)

English Meaning - introduction of additional funding from successful divisions of a business to the weak division which is is not doing well.

18.swap (noun)

English Meaning - exchange, interchange, trade-off.

19.volatility (noun)

English Meaning - unsteadiness, unpredictability, instability, unreliability.

20.inject (verb)

English Meaning - introduce, instil, bring in, infuse, imbue, inculcate.

21.liquidity (noun)

English Meaning - the availability of liquid assets; liquidity means liquid assets; cash; (liquid asset is an asset which can be easily sold/converted into cash without losing its value); a measure of activity (i.e. the ability to buy or sell easily) in a market.

22.liquidity (noun)

English Meaning - (in the banking system) it refers to readily available cash that banks need to meet short-term business and financial needs.

23.seek (verb)

English Meaning - try, aim, attempt.

24.corporate tax cut (noun)

English Meaning - a reduction in the tax rate that companies pay on their profits. This can cause higher profits for firms, which can be invested in the stock market or used to buy back shares.

25.trade war/tariff war (noun)

English Meaning - a condition in which a country increases tariffs on foreign goods and imposes quota restrictions to restrict other countries’ trade.

26.mark (verb)

English Meaning - indicate, signify, represent.

27.tranche (noun)

English Meaning - part, section, portion (of something).

28.tenor (noun)

English Meaning - the general content/meaning.

29.reserve (noun)

English Meaning - a foreign currency that is held in significant quantities by central banks or other monetary authorities.

30.in exchange (for) (phrase)

English Meaning - in return (for)

31.at a premium (phrase)

English Meaning - at a higher rate; above the usual price.

32.tool (noun)

English Meaning - mechanism, means, instrument, apparatus.

33.deploy (verb)

English Meaning - employ/bring into effective action; bring into service; have recourse to; use, utilize, employ, make use of, take advantage of.

34.constraint (noun)

English Meaning - restriction, limitation, restraint.

35.curb (verb)

English Meaning - control, contain, constrain, restrict, limit.

36.address (verb)

English Meaning - tackle, deal with, attend to, try to sort out.

37.Inflationary/price pressures (noun)

English Meaning - the demand and supply-side pressures that can cause a rise in the general price level; cost-push inflation, hot-economy, deficit finance.

38.neutralise (verb)

English Meaning - eliminate, cancel out, nullify/invalidate.

39.deficit (noun)

English Meaning - deficiency, shortage, shortfall, inadequacy.

40.liquidity deficit (noun)

English Meaning - it happens when banks don’t have enough cash to meet customer demands for credit.

41.as of (phrase)

English Meaning - from (a specified time).

42.term (noun)

English Meaning - tenure, period of/in office; period, time, stint, spell.

43.tariff (noun)

English Meaning - a tax imposed by one country on the goods and services imported from another country.

44.tensions (noun)

English Meaning - strained relations, strain, unease.

45.Foreign exchange (Forex or FX) (noun)

English Meaning - the conversion of one currency into another at a specific rate known as the foreign exchange rate. The conversion rates for almost all currencies are constantly floating as they are driven by the market forces of supply and demand.

46.currency reserve (noun)

English Meaning - a currency that is held in large amounts by central banks and monetary authorities as part of their foreign exchange reserves programme. (E.g. The Reserve bank of India is the central bank in India).

47.foreign exchange reserve or forex reserve (noun)

English Meaning - Foreign currency assets held by the central banks of countries. The amounts of assets /money in foreign currencies that a country has in its central bank (in India, it is Reserve bank of India).

48.depreciate (verb)

English Meaning - decrease, decline, drop/lose value.

49.breach (verb)

English Meaning - break, violate, fail to comply with.

50.mark (noun)

English Meaning - level, point, stage.

51.portfolio (noun)

English Meaning - a range of investments (like shares, holdings, securities, equities, bonds).

52.portfolio (noun)

English Meaning - a range of products or services.

53.foreign portfolio investments (FPIs) (noun)

English Meaning - investments in financial assets, such as shares, government bonds, corporate bonds, convertible securities, infrastructure securities etc in a foreign country.

54.foreign portfolio investor (noun)

English Meaning - Investors investing in financial assets, such as shares, government bonds, corporate bonds, convertible securities, infrastructure securities etc. in a foreign country.

55.foreign institutional investors (FII) (noun)

English Meaning - companies established or incorporated outside India and make proposals for investments in India. These include hedge funds, pension funds, mutual funds and insurance companies.

56.equity market (noun)

English Meaning - stock market, securities market, share market (a stock is a security, but every security is not a stock).

57.given (preposition)

English Meaning - considering, taking into account, bearing in mind.

58.necessity (noun)

English Meaning - essential requirement, prerequisite, necessary, indispensability.

59.rather than (phrase)

English Meaning - instead of.

60.proactive (adjective)

English Meaning - energetic, motivated, farsighted, cautious, careful.

61.capitalise on (phrasal verb)

English Meaning - take advantage of, use, make use of, benefit from.

62.extend (verb)

English Meaning - give, present, hold out, offer, make available.

63.credit (noun)

English Meaning - a type of loan or line of credit extended to individuals or businesses by financial institutions. It is the ability to borrow money or goods from a lender in exchange for repayment at a later date.

64.cycle (noun)

English Meaning - series, sequence, run,

65.capital investment (noun)

English Meaning - it involves allocating resources to acquire or upgrade long-term assets like property, machinery, or technology for the business. The money used by a business to purchase fixed assets, such as land, machinery, or buildings.

66.intact (adjective)

English Meaning - not influenced; not swayed; undamaged, unspoiled, unimpaired, untouched.

67.in turn (phrase)

English Meaning - in return, in response; successively, in succession.

68.propel (verb)

English Meaning - to cause something to move forward; spur, drive, prompt, precipitate, impel.

69.Gross domestic product (GDP) (noun)

English Meaning - a measure of economic activity in a country. It is the total value of a country’s annual output of goods and service.

70.prevailing (adjective)

English Meaning - enduring, persistent, long-standing, perennial, long-term, lasting, long-lasting, continuing.

71.headwinds (noun)

English Meaning - (in business) situations or conditions that make growth harder/difficult.

72.tailwinds (noun)

English Meaning - (in business) situations or conditions that move growth, revenues, or profits higher.