Special window for oil firms’ forex deals over, says RBI

The Reserve Bank of India on Monday said that state-run oil marketing companies have returned to the normal foreign exchange market for their daily dollar requirements amid signs of stability returning to the currency markets.

The Reserve Bank of India (RBI) on Monday said that state-run oil marketing companies (OMCs) have returned to the normal foreign exchange market for their daily dollar requirements amid signs of stability returning to the currency markets.

“Beginning last week, the public sector oil marketing companies (OMCs) have started accessing the foreign exchange market for their entire daily dollar demands,” RBI said in a statement.

As the rupee plunged to an all-time low of 68.85 to a dollar on August 28, RBI had opened special window for oil companies allowing them to directly source dollars from the central bank instead of buying these from the spot foreign exchange market through normal banking channels.

The rupee had risen to as much as 61.96 to a dollar as manufacturing activity returned to growth in November, but it fell soon after RBI said state-run oil companies were sourcing all of their dollar needs in markets.

It closed at 62.31 to a dollar on Monday, up 13 paise from Friday’s close.

Indian Oil Corp (IOC), Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp Ltd (HPCL), the three OMCs, are the biggest buyers of dollars, requiring $8-8.5 billion every month to import an average 7.5 million tonnes of crude oil.

RBI said the OMCs have also been advised to utilise revolving lines of credit made available by banks with the objective of tiding over humps in dollar demand.

“It will consider opening the swap window to OMCs on rare days when there is a pronounced spurt in dollar demand in the foreign exchange market,” the central bank said.