rbi directs oil cos to buy dollars from one psu bank

7/27/2019 RBI Directs Oil Cos to Buy Dollars From One PSU Bank

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RBI directs oil cos to buy dollars fromone PSU bankTuesday, Jul 9, 2013, 19:01 IST | Place: New Delhi | Agency: PTI

The decision follows yesterday's meeting between RBI and oil firms to discuss measuresto control volatility and high fluctuations in the exchange rate.

With rupee depreciating sharply against the US dollar, the Reserve Bank today orderedstate- owned oil companies to purchase their dollar requirement from a single publicsector bank so as to curb volatility in the currency.

State oil refiners, who are the biggest buyers of US dollars, agreed to implement the RBIorder with immediate effect, sources with direct knowledge of the development said.

The companies were even willing to accept RBI selling dollars directly to them through asingle window.

RBI issued orders to Indian Oil, Hindustan Petroleum, Bharat Petroleum and MangaloreRefinery to stop seeking quotes from several banks for their USD 8-8.5 billion of monthly US dollar requirement.

Oil firms seeking multiple quotes for their dollar requirement was felt to be one of thereasons adding to speculation on demand for the American currency and volatility in thelocal unit.

RBI, sources said, asked oil firms to buy dollars from a single bank at their publishedreference rate.

IOC, the nation's largest refiner, will buy their monthly requirement of USD 3.8-4 billiondollars from its official banker State Bank of India. Similarly, BPCL, HPCL and MRPL willbuy their dollar requirement from a single bank.

The decision follows yesterday's meeting between RBI and oil firms to discuss measuresto control volatility and high fluctuations in the exchange rate.

The central bank had last year suggested that refiners buy their dollar requirement froma single public sector bank to end speculation in rupee market caused by competitivequotes taken from multiple banks.


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But the measure was never implemented as RBI did not give written order as sought byoil firms to end their practice of seeking competitive quotes.

Chidambaram to meet key UScorporates to attract investment

Tuesday, Jul 9, 2013, 18:11 IST | Place: New Delhi | Agency: PTI

The Minister, who left on a four-day long tour last night, will also hold bilateral talks withhis US counterpart Treasury Secretary Jacob Lew.

- DNA

Finance Minister P Chidambaram will be meeting officials of top American companieslike Walmart, Boeing and Lockheed Martin during his US tour to sell India growth storyand attract investments to combat the falling rupee.

The Minister, who left on a four-day long tour last night, will also hold bilateral talks withhis US counterpart Treasury Secretary Jacob Lew.

Chidambaram's US programme include meetings with Walmart Asia CEO Scott Price,Boeing International President Sheperd W Hill, Lockheed Martin International CEO PatDewar, Microsoft's General Counsel and Executive Vice President (Legal and Corporate

Affairs) Brad Smith, among others.

His overseas visit comes at a time when the rupee has taken a beating and had touchedall-time low of 61.21 to a dollar yesterday.

The huge outflow of foreign funds to the tune of USD 7 billion alone in June followingconcerns over tapering of bond purchases by the US government is putting pressure onrupee.

Chidambaram is reported to have held consultations with the Prime Minister ManmohanSingh and other senior economic advisors before leaving for the US.

The government has been contemplating to raise foreign investment limits in varioussectors, including defence, telecom and retail, and is likely to take a decision by month-end.

"The Finance Minister is likely to discuss the issue of investment by US companies inIndia especially in infra sector, various policy measures taken by the Government to


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boost investment in the country and tax related matters among others," according to astatement issued ahead of his visit.

Chidambaram will also address the US-India Business Council (USIBC) LeadershipSummit on July 11.

upee plunge keeps debt funds underleash as bond yield jumps

Tuesday, Jul 9, 2013, 18:08 IST | Place: Mumbai | Agency: PTI

Between April 2 and July 8 this fiscal, the rupee has plummeted by 12.81%, and hit all-time low of 61.21 per cent yesterday.

Returns from the debt funds in the mutual fund industry are likely to be subdued due tothe hardening bond yields following the rupee plunge, according to industry experts.

They, however, maintain that as the rupee stabilises, investor interest will come back tothe debt market.

Between April 2 and July 8 this fiscal, the rupee has plummeted by 12.81%, and hit all-time low of 61.21 per cent yesterday.

"In the short-term, the returns from debt funds, especially gilt funds, will be impacteddue to the hardening of the yields of government securities. However, when the rupeestabilises, which will help the Reserve Bank slash lending rates, will support higherreturns," UTI Mutual Fund group president and head of fixed income Amandeep SChopra told PTI today.

The yield on 10-year benchmark bonds closed at 7.57 per cent on Monday as the rupeebreached yet another psychological barrier of 61 to the dollar and touched all time lowof 61.21 per dollar intra-day, before closing at 60.61 on RBI intervention.

Chopra also said the volatility in the rupee and the bond markets are likely to subside inthe next few quarters after which returns will be better from the gilt funds.

He, further, said given the low inflation numbers, good monsoons and a credible fiscalconsolidation plan, the RBI would start reducing rates as the rupee stabilises, whichwould have positive impact on the return.


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Bond yields and return in debt funds move in opposite direction. As bond yield falls,return goes up and as it rises, the yield drops.

IDBI MF chief executive officer Debashish Mallick also echoed similar sentiments. "Therewas an expectation that RBI will cut rates as inflation was coming down. However, fall in

the rupee has complicated the matter for the central bank in rate cut front.

"So, as the rupee regains strength, returns from debt funds will be better due to easingof monetary policy by RBI," Mallick said.

He, however, said there is no outflow from these funds as of now due to hardening of the yield. "Return on fixed income products is policy rate-driven. So as the policy ratescome down, returns will go up from these funds," Mallick said.

However, another fixed income analyst with an investment firm said there is an

apprehension in the market that the RBI may hike rates in the current environment of depreciating rupee, that adversely affects the current account deficit.

"If these apprehensions come true, you will see further hardening of the G-Sec yieldaffecting the return," he said.

Assets under management of debt funds constitute 75 per cent of the total assets of themutual fund industry.

As per experts, investors can opt for short-duration funds or liquid plus funds for higherreturn in the current environment than investing into long-term debt funds.

Sensex up 115 pts as Rupee bouncesback from lows; bluechips rally

Tuesday, Jul 9, 2013, 12:55 IST | Place: Mumbai | Agency: IANS

The 30-share index started the day's trade on a firm note at 19,446.30 and rose furtherto close 114.71 points, or 0.59 per cent higher at 19,439.48. Sensex had lost 171.05points yesterday.

Tracking firm global cues, the BSE benchmark Sensex on Tuesday rose by nearly 115points led by bluechips, including HDFC Bank and Sun Pharma, in step with a smartrecovery in rupee.


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Stock markets mirrored the currency's movement which bounced back from a recordlow of 61.21 after Sebi and Reserve Bank announced a slew of measures to curbspeculative trade in currency derivatives, brokers said.

The 30-share index started the day's trade on a firm note at 19,446.30 and rose furtherto close 114.71 points, or 0.59 per cent higher at 19,439.48. Sensex had lost 171.05points yesterday.

Profit booking at yesterday's low levels also boosted shares on the index, they added.

The market remained bullish ahead of a meeting to be chaired by Prime MinisterManmohan Singh, where some major decisions to boost the manufacturing sector wereexpected.

Similarly, the wide-based National Stock Exchange index Nifty gained 47.45 points, or

0.82 per cent, to close at 5,859.00. Also, SX40 index, the flagship index of MCX-SX,closed 62.75 points, or 0.54 per cent higher at 11,598.19.

Also, a firming trend in the global markets on cheerful begining of earning quarter in theUS further supported the market sentiment, brokers said.

Out of the 30 BSE index components, 22 stocks ended with gains led by Sun Pharmarising 3.57 per cent to Rs 1,079.95.

Market heavyweights Reliance Industries and Infosys rose by 0.58 per cent to Rs 873.35

and 0.97 per cent to Rs 2,495.70.

After falling heavily yesterday, banking stocks recovered sharply as rupee rose to 60.12against the dollar intraday today. Among the major gainers, HDFC Bank rose by 1.27per cent to Rs 668.75 and ICICI Bank by 0.66 per cent to Rs 1,034.70.

Sectorally, the consumer durable sector index gained the most by 1.93 per cent to6,276.96, followed by power index by 1.86 per cent to 1,644.48.

ensex up 121 points in early trade onrecovery in rupee, global cues

Tuesday, Jul 9, 2013, 10:46 IST | Place: Mumbai | Agency: PTI

The wide-based National Stock Exchange index Nifty rose by 38.90 points, or 0.67 %, totrade higher at 5,850.45.


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- DNA

The BSE benchmark Sensex on Tuesday recovered by over 121 points in early trade onthe back of fresh buying by participants triggered by a firming trend on other Asian

bourses and recovery in the rupee.

The 30-share index gained 121.53 points, or 0.63 %, to trade at 19,446.30, with all thesectoral indices led by realty, banking and capital goods rising up to 0.93 %. Sensex hadlost 171.05 points on Monday.

The wide-based National Stock Exchange index Nifty rose by 38.90 points, or 0.67 %, totrade higher at 5,850.45.

Brokers said fresh buying by funds and retail investors, tracking a firming trend on other

Asian bourses, following overnight gains in the US markets, supported the tradingsentiment here.

Besides, recovery in the rupee to 60.13 against the dollar also triggered buying activity,they said.

In Asia, Hong Kong's Hang Seng index rose by 0.14 %, while Japan's Nikkei was up by1.16 % in early trade.

The US Dow Jones Industrial Average ended 0.59 % higher on Monday.

rbi directs oil cos to buy dollars from one psu bank

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