Mumbai, Aug. 28: The Reserve Bank of India today decided to open a special window to meet the foreign exchange needs of three public sector oil marketing companies (OMCs).
The move is likely to bring some relief to the battered rupee in tomorrow’s trade as it will ease the demand for dollars from the OMCs.
Indian Oil Corporation, Bharat Petroleum Corporation Ltd and Hindustan Petroleum Corporation Ltd are the biggest buyers of dollars, which they use to purchase crude oil. India imports around 80 per cent of its crude oil requirements.
Dollar demand from the OMCs amount to around $6 billion per month.
During April-July, oil imports stood at about $54.6 billion, which was 2.65 per cent higher than $53.2 billion in the corresponding period of the last year.
“On the basis of the assessment of current market conditions, the RBI has decided to open a forex swap window to meet the entire daily dollar requirements of three public sector oil marketing companies,” the central bank said in a communication issued late in the evening.
“Under the swap facility, the Reserve Bank will sell/buy dollar-rupee forex swaps for a fixed tenor with the OMCs through a designated bank. The swap facility gets operationalised with immediate effect and will remain in place until further notice,” it stated.
Currency swaps involve an exchange of cash flows in two different currencies.
“This could bring some relief to the rupee. We could see the currency rallying in tomorrow’s trades since it will take out the dollar demand of PSUs from the market. However, the key question is whether such an improvement in its value will be sustained,” an analyst said.
He added that the domestic currency could continue to remain under pressure against the dollar because of the apprehensions ranging from the gradual withdrawal of monetary stimulus by the US Federal Reserve to the firming up of global crude oil prices.
The rupee has depreciated more than 16 per cent this year owing to the relentless demand for the greenback even as its supplies failed to keep pace following the outflow in FII investments.
Over the past seven sessions, foreign institutional investors (FIIs) have sold about $1 billion worth of shares.