Re gain unlikely from direct $ sale to oil cos

SBI says RBI's directive to oil firms will not help stem the fall in rupee.

Written by Agencies | Mumbai | Published: June 23, 2012 10:50:11 am

State Bank of India said RBI’s direction to oil companies to procure half of their dollar requirements directly from a select group of PSU banks will not help stem the fall in rupee.

“I don’t think it increases overall availability of dollars or it improves the rupee-dollar price,” SBI Chairman Pratip Chaudhuri told reporters after the bank’s annual general meeting here.

He said the bank carries a dollar position of up to $ 10 million on a daily basis and to support the large demand from oil marketing companies and Reliance Industries,the single largest importers of crude,it will have to raise money from the open market.

Concerned over rupee’s down slide which touched an all time low of 57.37 a dollar today,RBI today asked oil firms,which are the largest buyers of the US currency,purchase 50 per cent of their dollar needs directly through a public sector bank.

RBI feels that oil firms seeking a single quote for their dollar requirement,instead of present practice of floating inquiring with several public and private sector banks,would help check volatility and arrest the free-fall of the rupee.

“It does not increase the overall availability. It is possibly to fend-off the criticism that the RBI is not doing enough,” Chaudhuri said.

When asked if the changes bought in today will have any material impact on the exchange rate,he said,”in our understanding,no. It may let the RBI understand what is the demand coming from two or three sources.”

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