Aug 29, 2013, 09.53 AM IST
CNBC-TV18’s executive editor Latha Venkatesh reports that the Reserve Bank of India (RBI) will meet the dollar demands of three oil companies Indian Oil Corporation (IOC), Hindustan Petroleum Corporation Ltd (HPCL) and Bharat Petroleum Corporation Ltd (BPCL) through direct forex swaps.
The rupee is expected to open sub-68 against the dollar today reports CNBC-TV18’s executive editor, Latha Venkatesh. Venkatesh says the Reserve Bank of India (RBI) will meet the dollar demands of three oil companies Indian Oil Corporation ( IOC ), Hindustan Petroleum Corporation Ltd ( HPCL ) and Bharat Petroleum Corporation Ltd ( BPCL ) through direct forex swaps.
The total oil bill is USD 156 billion assuming that the monthly bill would come to USD 13 billion. This is the kind of demand the RBI is trying to take out of the system. The manner in which it will be done is through reserves neutral. It will be a sell/buy/swap from the RBI and for the counterparty, it will be a buy/sell. So, what basically HPCL or BPCL will do is that they will buy the dollar with an agreement to sell it back to the RBI after two months or three months, whatever is the swap is and they would pay the swap rate for it.
However, the immediate advantage is that demand of USD 13 billion goes out of the system. The total monthly import bill comes to about USD 30 billion, so one-third of the demand is taken out of the system.
The rupee closed at an all-time low of 68.80/USD recording it's biggest single day crash in two decades on Wednesday.
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