MUMBAI, Oct 16 Reuters The maturity of a central bank dollarrupee swap transaction next week is prompting worries over the availability of dollars in the banking system, pushing forward premiums lower, foreign exchange traders said on Monday.

The Reserve Bank of India RBI had conducted a 5 billion sellbuy dollarrupee swap last year. Under this swap, the RBI sold 5 billion to banks on April 28, 2022. At maturity on Oct. 23, the central bank will buy the dollars back.

I think the fear is that RBI will take delivery of these dollars and not roll it over, a chief dealer at a midsized private sector bank said.

That would mean that you could potentially have 5 billion taken out of the banking system.

Anticipating the dollar shortage, banks are conducting buysell swaps or receiving premiums for near deliveries, the banker said.

In a buysell swap, a bank buys dollars on the spot date and sells them at a later date.

The gap between the exchange rates for purchase and sale is the forward premium.

In principle, forward premiums reflect the interest rate differentials between two currencies. They impact the cost of hedging for importers and exporters.

Speculation around the RBI swap maturity and buysell swaps by a staterun bank have resulted in continuous downside pressure on forward premiums, a senior trader at large private sector bank said.

The 1month premium is down to 8 paisa from 11 paisa last Tuesday. In yield terms, the fall in the premium is nearly 50 basis…