India’s rupee rose to the highest in more than two weeks after the central bank said it will provide foreign currency to refiners in exchange for bonds to help them meet the increasing cost of crude oil.
The rupee advanced for a second day after the Reserve Bank of India said it will buy the so-called oil bonds from refiners and provide equivalent amount of foreign exchange. The announcement, meant to ensure stability to markets due to a rally in crude oil prices, was made by the central bank on May 30 after trading closed. Indian refiners meet three-quarters of their annual energy needs from abroad.
``Dollar demand from the biggest section of buyers will be met to a large extent and will reduce volatility,’’ said Jayant Chiney, treasurer at state-owned Bank of India in Mumbai. ``I expect the rupee to move with a positive bias now.’’
The rupee climbed 0.5 percent to 42.235 versus the dollar as of 10:10 a.m. in Mumbai, according to data compiled by Bloomberg. It rose to as much as 42.1725, the highest intraday level since May 14.
Crude oil on the New York Mercantile Exchange has risen almost 33 percent this year and reached a record $135.09 per barrel on May 22.
The Reserve Bank said on May 30 its move will ``improve the access of oil companies to domestic liquidity and alleviate the lumpy demand in the foreign-exchange market.’’
The central bank will buy each day as much as 10 billion rupees ($237 million) of the oil bonds, issued to refiners by the government to compensate for selling fuel below cost, the bank said without elaborating.
India’s oil imports rose to a record $8.6 billion in March, government data show.
No comments:
Post a Comment