May 17 (Bloomberg) -- The Reserve Bank of India is considering selling dollars directly to oil importers to reduce exchange-rate volatility after the rupee fell to a record low yesterday, a central bank official said.
The recent widening of swings in the local currency may last only for a short period and will ease once global markets stabilize, the official said, asking not to be identified, citing central bank policy. India buys abroad 80 percent of the oil it uses and crude shipments accounted for 32 percent of the country’s $489 billion import bill in the year through March.
The rupee slid 1.3 percent in Mumbai yesterday and touched a record low of 54.5225 per dollar, according to data compiled by Bloomberg. A 0.4 percent advance today pared its loss this quarter to 6.3 percent, still Asia’s worst currency performance. The central bank may offer dollars to oil companies at its daily reference rate for the local currency, according to B. Mukherjee, director of finance at Hindustan Petroleum Corp., India’s third-largest state-run oil refiner.
“The Reserve Bank may sell dollars to importers at its reference rate whenever the rupee falls sharply, and this will reduce dollar demand in the market,” Mumbai-based Mukherjee said in an interview. “This has happened in the past and could again happen in the near future.”
The rupee’s one-month implied volatility, a measure of exchange-rate swings used to price options, rose 302 basis points, or 3.02 percentage points, since April 30 to 12.52 percent.
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