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The Reserve Bank's move to open a forex swap window to meet dollar requirements of three public sector oil marketing companies has helped shore up the rupee and reduced volatility in the currency market, industry body Assocham said today.
"RBI's efforts to shore up the rupee and curb volatility in the currency market via a special Dollar swap window for oil companies appears to have comforted the market," Assocham President Rana Kapoor said.
The RBI on Wednesday opened a special window to help three PSU oil marketing firms including IOC, HPCL and BPCL, which need about $8.5 billion every month to meet their daily foreign exchange requirement, in a bid to check the rupee's free fall.
"The measure will provide much desired comfort to the currency markets but needs to be complemented by upward adjustments to diesel price for the Government to reinforce its conviction to contain CAD and fiscal deficit," Kapoor said.
The PSU oil companies are the biggest buyers of dollar, requiring $8-8.5 billion every month for importing an average 7.5 million tonnes of crude oil. The RBI decision is aimed at curbing volatility in the forex market.
Under the swap facility, the RBI had said, it will "sell/ buy USD-INR forex swaps for fixed tenor with the oil marketing companies through a designated bank."
Breaking the streak of severe battering it suffered in the last few days, the rupee yesterday soared by a staggering 225 paise to end at 66.55 against the dollar and the Sensex jumped by over 400 points on the back of RBI opening a special dollar facility for PSU oil companies.
However, The rupee today fell by 75 paise to 67.30 against the dollar in early trade, after yesterday's strong recovery, at the Interbank Foreign Exchange market on month-end dollar demand from importers amid strengthening of the US currency overseas.
