Oil PSUs buying some US dollar requirements from SBI

RBI had asked the oil firms to procure their dollar requirement for importing crude oil directly from the central bank using the special window

Indian Oil Corp (IOC) and other state oil firms are buying some dollars from State Bank of India, outside the special window created by RBI.

"We (oil PSUs) are buying some dollars from SBI," IOC Director (Finance) P K Goyal told reporters here.

IOC and other state-owned oil firms are not buying dollars from open market yet and have been sourcing some of their requirement from single vendor, SBI.

In a attempt to curb volatility in the exchange rate, the Reserve Bank of India (RBI) had in August asked the oil firms to procure their dollar requirement for importing crude oil directly from the central bank using the special window.

Economic Affairs Secretary Arvind Mayaram had yesterday said that the weakness in rupee was due to shifting part of dollar purchases by oil companies to open market.

"Rupee weakness is due to oil marketing companies (OMC) forex demand being moved to market. 30-40% of OMC demand has moved to market," Mayaram had said.

The PSU oil companies are the biggest buyers of dollars, requiring $8-8.5 billion every month for the import of an average 7.5 million tonne of crude oil.

The rupee has recovered over 10% since August 28, when it fell to a record low of 68.85 to the dollar. The gain in rupee followed optimism that the US Federal Reserve would delay the tapering of its bond buying programme.

To attract dollars, RBI in September had opened a special concessional window for swapping foreign currency non-resident (banks) (FCNR-B) deposits and overseas foreign currency borrowings for banks. So far $15.2 billion has come from this window.

The window will remain open till the end of this month, and many analysts have pegged the inflows from these instruments to be in the range of $20-25 billion.