NEW DELHI: India is considering asking the central bank to supply dollars without delay to oil marketing corporations or thru a state-run bank, a government supply mentioned on Thursday, as part of steps to stem a fall in the rupee.
As an "extreme" measure, the federal government could also have a look at raising dollars by way of tapping expatriates to spend money on bonds for non-resident Indians, mentioned the supply who has direct wisdom of the deliberations over the currency's fall.
The rupee is Asia's worst acting currency this year. However, earlier on Wednesday it posted its strongest intraday achieve since May 25 on hopes that oil corporations, which might be a few of the biggest patrons of greenbacks in India, would now direct their call for to the central bank and no longer the open marketplace.
"We could ask the Reserve Bank of India to earmark $8 billion to $10 billion a month separately for the public sector oil companies," the supply mentioned, declining to be named as the discussions continue. "As an extreme step, we would be ready to raise dollars through non-resident deposits."
Finance ministry spokesman DS Malik declined to comment.
The supply mentioned proposed restrictions on the import of non-essential items can have just a restricted affect on the falling rupee as the current account deficit continues to widen.
The rupee has depreciated more than 11 according to cent this year, last at 72.39 on Wednesday after hitting a file low of 72.99 on Tuesday.
The supply mentioned it would fall further once US sanctions on Iran's oil exports come into pressure in November, measures which would possibly prohibit world crude supplies and push up costs.
During a 2013 currency disaster, a separate window for oil corporations through which the central bank sold dollars to importers on a forward swap foundation without resulting in a drain down on foreign currencies reserves helped push up the rupee.
"This is one of the easiest solutions that should have been done long back," mentioned a dealer at a overseas bank. "Why are the policymakers waiting for people to bear such huge losses on the currency and not announcing this simple measure?"
As an "extreme" measure, the federal government could also have a look at raising dollars by way of tapping expatriates to spend money on bonds for non-resident Indians, mentioned the supply who has direct wisdom of the deliberations over the currency's fall.
The rupee is Asia's worst acting currency this year. However, earlier on Wednesday it posted its strongest intraday achieve since May 25 on hopes that oil corporations, which might be a few of the biggest patrons of greenbacks in India, would now direct their call for to the central bank and no longer the open marketplace.
"We could ask the Reserve Bank of India to earmark $8 billion to $10 billion a month separately for the public sector oil companies," the supply mentioned, declining to be named as the discussions continue. "As an extreme step, we would be ready to raise dollars through non-resident deposits."
Finance ministry spokesman DS Malik declined to comment.
The supply mentioned proposed restrictions on the import of non-essential items can have just a restricted affect on the falling rupee as the current account deficit continues to widen.
The rupee has depreciated more than 11 according to cent this year, last at 72.39 on Wednesday after hitting a file low of 72.99 on Tuesday.
The supply mentioned it would fall further once US sanctions on Iran's oil exports come into pressure in November, measures which would possibly prohibit world crude supplies and push up costs.
During a 2013 currency disaster, a separate window for oil corporations through which the central bank sold dollars to importers on a forward swap foundation without resulting in a drain down on foreign currencies reserves helped push up the rupee.
"This is one of the easiest solutions that should have been done long back," mentioned a dealer at a overseas bank. "Why are the policymakers waiting for people to bear such huge losses on the currency and not announcing this simple measure?"
'Govt considers dollar window for oil firms, bonds to ease rupee pressure'
!['Govt considers dollar window for oil firms, bonds to ease rupee pressure']()
Reviewed by Kailash
on
September 19, 2018
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