The Reserve Bank of India (RBI) on Saturday announced a special dollar window to meet the entire daily foreign exchange requirements of three public sector oil marketing companies (OMCs), in a move aimed at easing pressure on the rupee amid rising crude oil prices.
The facility will enable Indian Oil Corporation Ltd (IOCL), Hindustan Petroleum Corporation Ltd. (HPCL) and Bharat Petroleum Corporation Ltd. (BPCL) to procure dollars directly from the central bank through designated banks, reducing their dependence on the spot foreign exchange market.
“On the basis of assessment of current market conditions, Reserve Bank of India has decided to open a special window to meet the entire daily dollar requirements of three public sector oil marketing companies,” the apex bank said in a notification.
The facility will take effect on Monday, October 12, and remain operational until further notice, the central bank said.
FCNR(B) deposits: Who bears the currency risk? | Explained The three OMCs are estimated to require about $300 million daily to finance crude oil imports.
Their substantial and recurring demand for dollars can add to buying pressure in the spot market, potentially weakening the rupee.
By meeting their requirements through the special window, the RBI aims to moderate this pressure and facilitate the oil companies’ access to foreign exchange.
The move comes amid rising crude oil prices, which increase India’s import bill and the demand for dollars.
As a major importer of crude, India is particularly vulnerable to higher international oil prices, which can widen the trade deficit and weigh on the domestic currency.
The RBI has foreign exchange reserves of around $735 billion, providing a substantial buffer to manage external-sector pressures.
The central bank has also recently mobilised more than $127 billion through foreign currency non-resident bank (FCNR(B)) deposits and an additional $9 billion through overseas foreign currency borrowings (OFCBs) and external commercial borrowings (ECBs), according to estimates cited in the data.
The special window signals the RBI’s willingness to use its foreign exchange resources to manage short-term market pressures arising from essential imports.
However, the extent to which it can contain rupee depreciation will also depend on the trajectory of crude prices, broader dollar movements and overall capital flows.
RBI raises FY27 inflation projection to 5.2% amid higher crude oil prices Experts said factors, including foreign investor, outflows due to lack of artificial intelligence themed stocks in Indian markets, hardening of rates in overseas markets, which offers relatively strong and risk-free returns, and also tightening by other central banks has led to the pressures on the rupee.
On Wednesday, Governor Sanjay Malhotra had assured that the RBI will help stabilise the rupee, which he said was undervalued, and help the currency find its correct value.
The RBI said authorised dealers should not permit users to rebook any foreign exchange derivative contract involving the Rupee (deliverable or non-deliverable), which has been cancelled. (With inputs from PTI)
