Indian Rupee Gains 0.03% Amid Special Dollar Facility for Oil Enterprises

India's Rupee Sees Temporary Relief as RBI Intervenes to Ease Dollar Pressure

The Indian rupee opened 25 higher on April 17 after the Reserve Bank of India (RBI) reportedly asked state-oil refiners to use a special credit line to reduce the impact of dollar-buying, thereby easing pressure on the currency. The currency was trading at 92.95 against the dollar after ending the previous session at 93.20.

Media reports indicate that the central bank has urged state-run oil companies to stop dollar purchases and instead use a special foreign exchange line, bringing back a measure that was used during the Ukraine-Russia war back in 2022. This decision is aimed at reducing the immediate pressure on the rupee, as oil companies are among the biggest buyers of dollars in India.

According to a Reuters report, the refiners are being prodded to meet the daily payment needs by accessing dollar credit lines through State Bank of India. Oil refiners buy dollars daily on a basis, typically executing trades through several banks, and bankers have cited these flows as a source of pressure on the rupee in recent days.

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These measures follow recent steps to curb excessive speculation in the offshore forwards markets. Although the benchmark Brent crude traded below $100 a barrel over renewed US-Iran peace push, traders stayed on the sidelines should there be any sudden move from the United States.

The currency has already weakened by about 3 percent on a year-to-date basis, making it one of the worst-performing currencies in Asia Pacific.