Forex swap and dollar window for oil companies - 2013

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India's central bank begins selling dollars to state-owned refiners
Mumbai (Platts)--28Aug2013/238 pm EDT/1838 GMT
     Reserve Bank of India late Wednesday said will will open a foreign
exchange swap window to meet the entire daily US dollar requirements of the
three state-owned refining and marketing companies.
     The move by the central bank is aimed to control volatility in the
currency markets by selling dollars directly to state oil companies who need
the currency to pay for imported crude.
     Indian currency fell to a record low of Rupees 68.8 to the dollar on
Wednesday, down Rupees 2.56 from Tuesday. The rupee has depreciated by about
24% in the last three months.
     "On the basis of assessment of current market conditions, Reserve Bank
of India has decided to open a forex swap window to meet the entire daily
dollar requirements of three public sector oil marketing companies (IOC, HPCL
and BPCL)," the bank said in a statement.
     The three oil companies have a combined demand of over $8 billion per
month and a direct dollar window for them would curb volatility in the rupee,
a forex analyst said.
     "This is not the first time that RBI has opened such a facility. We have
done it for a prolonged period of time in the past. One way in which this
would be useful is it would assure us supply of dollars," an oil industry
source said.
     India imports nearly 80% of its crude oil requirement and for the last
financial year the import bill stood at $144.3 billion, according to data
compiled by the Petroleum Planning Analysis Cell. India's financial year runs
from April through March.
     PPAC data showed India's crude oil imports by value rose 1.5% on year in
the first four months of the current financial year to $47.13 billion.
     "Under the swap facility, Reserve Bank will undertake sell/buy USD-INR
forex swaps for fixed tenor with the oil marketing companies through a
designated bank," RBI said, adding that the window has begun operating and
will remain open until further notice.
     In addition to the three state-owned refiners, private refiners Reliance
Industries and Essar Oil import crude oil.
--M.C.Vaijayanthi newsdesk@platts.com
--Edited by Jeff Barber, jeff.barber@platts.com



MH0100
Indian rupee gains against dollar after central bank measure
Mumbai (Agence France Presse )--29Aug2013/1251 am EDT/451 GMT
     India's rupee gained against the dollar on Thursday, coming off its
record low struck the day before, after the central bank announced yet another
measure to try to stabilise the currency.
     The battered rupee -- which has lost nearly 9% in the past week --
strengthened to 66.88 to the dollar, pulling back 2.8%, from a record closing
low of 68.80 on Wednesday.
     The rupee plunged 3.86% on Wednesday, its biggest one-day fall in
nearly two decades.
     Indian shares opened 0.61% up at 18,106.29 points on Thursday.
     The Reserve Bank of India announced late Wednesday that it will provide
dollars directly to oil companies, through a separate bank, a move aimed at
easing sharp volatility in the forex market.
     State-run oil firms are the main buyers of dollars in the market and
providing a separate window for them is an attempt at reducing pressure on
the rupee, analysts said.
     The measures are the latest undertaken by the RBI in recent months to
try to halt the fall of the rupee, Asia's worst-performing currency this
year, which has lost around a fifth of its value against the dollar since the
start of 2013.
     India's rupee crashed on Wednesday on worries about a US-led military
strike against Syria and surging crude oil prices fanned fears of a financial
crisis.
     Analysts fear the sharp rise in global crude oil prices will worsen
energy-import dependent India's already record current account deficit -- the
broadest measure of trade.
     The deficit hit a record $88 billion last year but the government has
said it will cut it to $70 billion this year.
     Other emerging market currencies, like the rupee, have been hit by
foreign fund outflows, with the Federal Reserve expected to wind down its
stimulus scheme as the US economy recovers.
     The rupee's woes have heightened economic challenges which the government
faces -- failure to move fast enough on economic reform, decade-low economic
growth, a string of government graft scandals, perceptions of policy
paralysis and the current account deficit, analysts say.

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