India’s RBI Said to Discuss Dollar Purchases With Biggest Buyers
The Reserve Bank of India and the nation’s state-owned refiners including Indian Oil Corp. (IOCL) are discussing ways to manage dollar demand in a bid to curb rupee volatility, an oil ministry official briefed on the matter said.
The central bank and the refiners are exploring the possibility of mandating a single state-run bank to sell dollars to the companies, eliminating bids that fuel speculation in the rupee, the person said, asking not to be identified because the matter is confidential. Another option is for the RBI to sell dollars directly to the oil companies, the person said.
The RBI was meeting oil company officials today to discuss their foreign exchange needs and it may set up a separate window to provide refiners with dollars, Reuters reported earlier, citing people it didn’t identify.
India’s rupee fell to a record today after a U.S. jobs report showing companies hired more workers than economists forecast added to the case for the Federal Reserve to reduce monetary stimulus. The refiners, the biggest buyers of the greenback, import about 80 percent of their crude oil requirements which they have to pay for in the U.S. currency. The nation spent $22.86 billion to import crude oil in the two months through May 31, according to oil ministry data.
P.K. Goyal, finance director at Indian Oil, S. Varadarajan, finance director at Bharat Petroleum Corp. (BPCL) and K.V. Rao, finance director at Hindustan Petroleum Corp., didn’t answer two calls each to their mobile phones today seeking comments.
Oil Secretary Vivek Rae, the senior-most bureacrat in the ministry, wasn’t available for comments at his office in New Delhi. The RBI’s Mumbai-based spokeswoman Alpana Killawala did not respond to a call to her mobile phone.
The rupee touched 61.2125 a dollar, weakening past the previous all-time low of 60.7650 on June 26. One-month implied volatility, a gauge of expected moves in the exchange rate used to price options, rose 75 basis points, or 0.75 percentage point, to 13.56 percent, the highest closing level since June last year.
The rupee pared today’s losses on speculation the central bank sold dollars, two traders said, asking not to be identified as the information isn’t public.
Any dollar sales by the Reserve Bank will be aimed at reducing market volatility, rather than supporting the exchange rate as the rupee’s slide is in line with losses in other currencies, according to Barclays Plc.
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