The Reserve Bank of India (RBI) has instructed state-run oil refiners to reduce their spot US Dollar (USD) purchases and instead utilize a special credit line provided through the State Bank of India, according to BNY’s Bob Savage [1]. This measure, which was previously implemented during the Ukraine war, is intended to alleviate pressure on the Indian Rupee, which has depreciated by more than 3% this year to reach record lows, making it Asia’s worst-performing major currency [1].
The special credit line is accessible to Indian Oil Corp, Hindustan Petroleum, and Bharat Petroleum. Collectively, these three companies account for approximately half of India’s 5.2 million barrels per day refining capacity [1]. By directing these refiners to use the credit line for their foreign exchange needs, the RBI aims to reduce immediate dollar demand from the sector and help stabilize the USD/INR exchange rate, especially in the context of rising oil prices and ongoing foreign outflows [1].
No specific market reactions or analyst forecasts are mentioned in the source. However, the move is positioned as a targeted intervention to address currency volatility and external pressures on the rupee [1].
CONCLUSION
The RBI’s directive for state-run oil refiners to access a special credit line is a strategic effort to reduce dollar demand and support the rupee amid record lows and external pressures. While immediate market reactions are not detailed, the measure underscores the central bank’s proactive stance in managing currency stability.