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The Reserve Bank of India said on Monday state-run oil companies were now sourcing their entire dollar demand in markets, but added it would consider re-opening a special swap window on "rare days" of strong greenback demand.
The RBI also asked the oil marketing companies to smoothen their daily dollar demand so that upcoming bunched up demand was covered in advance in forward markets or on days with low dollar demand.
The central bank had opened a special forex swap window for oil marketing companies in late August, providing dollars via a forward swap agreement to reduce pressures on the rupee. Oil refiners are the single largest purchasers of dollars in markets.
The RBI added it would "keep all options open" regarding the settlement of the swaps, including the option of rupee settlements. Traders had worried about a surge in dollar demand from oil companies looking to repay their swap agreements.
The RBI added it has received $34 billion under its two forex swap windows, which are now closed. Any further funds raised under the foreign currency non-resident deposits or from banks' Tier I borrowings will flow directly into the market and not to the country's forex reserves.
The rupee trimmed gains and was trading at 62.22/23 to the dollar from 62.15 before the RBI statement.
