RBI selling keeps Re in check

The rupee strengthened today to end at 46.31 against the dollar, higher than yesterday's close of 46.35, on sustained dollar-selling intervention by the Reserve Bank of India (RBI).

With oil prices reaching new highs and domestic oil companies' demand for foreign exchange growing, a calculated change in their payment strategy has helped take some pressure off the rupee in recent weeks.

Foreign exchange dealers said oil importing companies were making their payments on a day-to-day basis instead of settling their dues at the end of the month. This strategy works well at a time when oil prices are volatile, according to a dealer.

The forex market would earlier witness a spike in demand towards the end of the month. According to a dealer, every $1 increase in the price of Dubai crude adds $675 million to India's import bill.

While oil companies have prudently changed their dollar-buying strategy, the RBI has also started intervening heavily in the market.