New Delhi, June 22: The petroleum ministry plans to ask state-run oil firms to buy half of their dollar needs from a PSU bank in accordance with an RBI directive to reduce the volatility of the rupee, which dipped to 57.30 against the dollar today.
"The RBI letter (asking oil marketing companies to buy dollars from a single public bank) has come to the government. We are in correspondence with the oil firms to make sure they comply with the directive," oil secretary G.C. Chaturvedi said.
The oil firms are one of the largest buyers of dollars. The three big state-run firms need about $8 billion every month to import crude and petroleum products such as LPG. The RBI feels that oil firms seeking a single quote for their dollar requirement, instead of the present practice of floating enquiries with several public and private banks, will help to check volatility and arrest the fall of the rupee.
"At present, oil companies seek dollar quotes from multiple banks, giving an exaggerated impression of their demand for dollar. This leads to the strengthening of the dollar against the rupee," he said.
Chaturvedi said if the oil firms were in need of $50 million on a particular day, they would send enquiries for that amount to several banks, which gave an impression that they needed several times more than the actual requirement.
However, State Bank chairman Pratip Chaudhuri did not believe that the RBI's move would have the desired impact. "I don't think it increases overall availability of dollars or it improves the rupee dollar price," he said.
Last month, the apex bank had indicated that it might ask PSU oil companies to buy dollars only from public banks, leading to the strengthening of the rupee. But the recovery was negated when the oil firms said they didn't get any instructions.
IOC needs $3-4 billion every month for its oil imports, chairman R.S. Butola said. It buys a fifth of its daily forex need from the SBI and the remaining through bids from a panel of 16 banks.
State-run oil firms have decided to wait and watch before cutting petrol prices as the rupee depreciation has almost nullified the gains accrued from the dip in crude prices, according to oil minister S. Jaipal Reddy.