The Reserve Bank of India (RBI), in its second dollar-rupee-buy-sell swap auction, received bids worth $18.65 billion, $2.3 billion higher than the first auction, for $5 billion on offer. The RBI on Tuesday set the cut-off premium \u2013 the threshold for any bank to receive any allotment \u2013 at Rs 8.38. Under the dollar swap measure, banks sell US dollars to the central bank and agree to buy the same amount of dollars at the end of the swap period. Banks would sell dollars at Rs 69.67 \u2013 the closing price on Monday \u2013 and would buy back the same amount of dollars at Es 78.05 per dollar after factoring in the cut-off premium price after three years. According to treasurers, the increased demand for the auction comes on account of corporates raising money overseas and hedging their risks with their respective banks. \u201cWith corporates increasing their borrowings from overseas markets, banks are using the swap measure to hedge their long-term risks with the RBI,\u201d said Ashutosh Khajuria, V-P, Federal Bank. However, even after the initial dollar swap auction of $5 billion held in March, the liquidity deficit in the banking system for the week ended April 19 was at a two-month high of Rs 85,000 crore, according to a Care ratings report. \u201cThe Reserve Bank of India will look at a combination of liquidity infusion measures like the dollar-swap and open market operations (OMOs) to curb the liquidity deficit,\u201d said Devang Shah, deputy head, Axis Mutual Fund. Also read:\u00a0Real opportunity for India to benefit from US-China trade war, says UBS; here are top stock picks RBI on Tuesday also announced OMOs worth Rs 25,000 crore to be conducted in two auctions in May. Through OMOs, it infused close to Rs 1.3 lakh crore in FY19. Earlier on March 26, the central bank had bought $5 billion through similar swap auction in a bid to ease liquidity. \u201cIn order to meet the durable liquidity needs of the system, the RBI has decided to inject rupee liquidity for longer duration through long-term foreign exchange Buy\/Sell swap in terms of its extant Liquidity Management Framework,\u201d RBI said in a statement.