RBI opens special dollar window for state oil companies

The Reserve Bank of India announced a special dollar sales facility for three state-owned oil companies on October 10. It will take effect on October 12 and remain available until further notice.

The facility covers Indian Oil Corporation Limited, Hindustan Petroleum Corporation Limited and Bharat Petroleum Corporation Limited. The central bank will sell dollars through designated banks to meet their daily foreign currency requirements.

The decision comes amid rising oil prices. It is intended to reduce the companies' need to purchase dollars in the spot market and ease pressure on the rupee. Reuters independently confirmed the special window.

The Hindu cited estimates that the three companies require about US$300 million each day to import crude oil. That is an estimate of demand, rather than an announced facility limit.

The Hindu reported RBI foreign exchange reserves of about US$735 billion. It also cited more than US$127 billion raised through FCNRB and another US$9 billion through OFCB and ECB.

Opening the window does not mean oil prices or the rupee's exchange rate have already changed. The central bank has announced a means of supplying foreign currency and its start date, rather than a guaranteed market outcome.