The Reserve Bank on Monday said state run oil refiners have returned to the foreign exchange market to meet all their dollar requirements as volatility in currency rates has eased over the past few weeks.
“Beginning last week, the public sector oil marketing companies (OMCs) have started accessing the FX market for their entire daily dollar demands,” the RBI said in a statement.
The central bank also said it will consider opening the swap window, which had been made available to OMCs since August end, on rare days when there is a pronounced spurt in dollar demand.
The OMCs have been advised to smoothen their daily dollar demand so that bunched up demand on a particular day is covered in advance in the forward forex market or covered on days with low demand.
Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum Corp, the three OMCs, are the biggest buyers of dollars, requiring $ 8-8.5 billion every month to import an average 7.5 million tonnes of crude oil.
On August 28, when the rupee touched an all-time low of 68.85 against the dollar, the central bank opened a swap window for the OMCs to meet their foreign exchange requirements directly from the RBI.
Since then, pressure on the rupee has eased. The local currency rose 16 paise to 62.28 against the dollar in early trade on Monday.
The RBI said the OMCs have also been advised to utilise revolving lines of credit made available by banks with the specific objective of tiding over humps in dollar demand.
In the backdrop of broad stability returning to the forex market, the RBI said the OMCs have been allowed to source dollars beyond their normal daily requirements.
“This process has already been put in place last week and it is expected that the excess demand of the OMCs will be funnelled to meet their swap (second leg) commitments over a period of time,” it added.
The RBI said it is closely monitoring the market and will continue to keep all options open regarding the settlement of OMC swaps, including rupee settlement.