TI:RBI may sell dollars directly to oil companies to check rupee volatility
NEW DELHI: The government and the central bank are pondering over a plan to move bulk dollar purchases by oil marketing companies out of a turbulent currency market to make the weakening rupee less volatile.
With a weekly demand of $2-3 billion, roughly one out of every 10 dollars bought or sold in the Indian foreign exchange market is by oil companies. In a choppy market, the rupee comes under pressure whenever these companies step in to buy the greenback.
"In such circumstances, a direct dollar line to oil companies can help check volatility in currency markets...It has been discussed," said an official familiar with the matter. India's crude oil and petroleum product imports totalled about $155 billion last year.
