 "Dollar purchases by oil companies halve amid falling crude prices")
With global oil prices falling to their lowest level in six years, dollar buying by oil marketing companies (OMCs) has also declined sharply from a few months earlier.
Their daily buying on most days is now about $250 million, against about $500 mn around the time prices began to slide sharply, at the start of the second half of 2014.
As crude oil prices are expected to soften further, this is a positive factor for the currency market, which might face outflows by foreign institutional investors once the US Federal Reserve starts raising interest rates later in 2015. Global crude was $115 a barrel in June 2014 and is now $45.5 a barrel.
“About six months ago OMCs’ average daily dollar buying was about $ 450-500 million, which has now come down to about $200-250 million. The drop in dollar demand is attributed to softening of global crude prices,” said Sandeep Gonsalves, forex consultant and dealer, Mecklai & Mecklai.
The rupee ended at 62.15 on Tuesday from the previous close of 62.14 a dollar. During intra-day trade, the rupee had touched 62.02 and from there it weakened to end at 62.15 as state-run banks were buying dollars, possibly on behalf of the Reserve Bank.
The fall in oil prices is seen as a boon for economy.
“It saves, on an annualised basis, around $50 billion, roughly, one third of our annual gross petroleum, oil, & lubricants import of about $160 bn. This is on a back-of-the-envelope, top-line basis. Of course, there will be leakages and other set-offs. But our external situation undoubtedly improves,” said RBI deputy governor Urjit Patel on Monday, at the Business Standard Best B-School Project Awards.
A sharp rise in gold import and a fall in export growth pushed the current account deficit (CAD) to $10.1 bn (2.1 per cent of gross domestic product) in the financial year’s second quarter, ending September, compared to $5.2 bn (1.2 per cent of GDP) for July-September 2013. The deficit was $7.8 bn (1.7 per cent of GDP) in the first quarter ended June, according to RBI data.
“The CAD position will improve, due to which the rupee might appreciate a bit but the central bank could intervene to mop excess supply of dollars to further strengthen their foreign exchange reserves,” said Ashutosh Khajuria, president (treasury), Federal Bank.
Their daily buying on most days is now about $250 million, against about $500 mn around the time prices began to slide sharply, at the start of the second half of 2014.
As crude oil prices are expected to soften further, this is a positive factor for the currency market, which might face outflows by foreign institutional investors once the US Federal Reserve starts raising interest rates later in 2015. Global crude was $115 a barrel in June 2014 and is now $45.5 a barrel.
“About six months ago OMCs’ average daily dollar buying was about $ 450-500 million, which has now come down to about $200-250 million. The drop in dollar demand is attributed to softening of global crude prices,” said Sandeep Gonsalves, forex consultant and dealer, Mecklai & Mecklai.
The rupee ended at 62.15 on Tuesday from the previous close of 62.14 a dollar. During intra-day trade, the rupee had touched 62.02 and from there it weakened to end at 62.15 as state-run banks were buying dollars, possibly on behalf of the Reserve Bank.
The fall in oil prices is seen as a boon for economy.
“It saves, on an annualised basis, around $50 billion, roughly, one third of our annual gross petroleum, oil, & lubricants import of about $160 bn. This is on a back-of-the-envelope, top-line basis. Of course, there will be leakages and other set-offs. But our external situation undoubtedly improves,” said RBI deputy governor Urjit Patel on Monday, at the Business Standard Best B-School Project Awards.
A sharp rise in gold import and a fall in export growth pushed the current account deficit (CAD) to $10.1 bn (2.1 per cent of gross domestic product) in the financial year’s second quarter, ending September, compared to $5.2 bn (1.2 per cent of GDP) for July-September 2013. The deficit was $7.8 bn (1.7 per cent of GDP) in the first quarter ended June, according to RBI data.
“The CAD position will improve, due to which the rupee might appreciate a bit but the central bank could intervene to mop excess supply of dollars to further strengthen their foreign exchange reserves,” said Ashutosh Khajuria, president (treasury), Federal Bank.