Indian rupee will settle down: P Chidambaram

Nov 11 2013, 14:17 IST
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Rupee weakness is due to OMC forex demand being moved to market, says P Chidambaram.. Rupee weakness is due to OMC forex demand being moved to market, says P Chidambaram..
SummaryRupee started weakening since last week after dollar purchase by oil firms was partly shifted to market.

With the Indian rupee declining to a two-month low of 63 to a dollar, Finance Minister P Chidambaram today assured the domestic currency will stabilise.

"Rupee will settle down," he told reporters here.

In early trade today, the rupee fell to 63.33 to a dollar, its weakest since September 18.

The Indian currency started weakening since last week after the dollar purchase by oil companies was partly shifted to the market.

"Rupee weakness is due to OMC forex demand being moved to market. 30-40 per cent of OMC demand has moved to market,"

Economic Affairs Secretary Arvind Mayaram had said last week.

The PSU oil companies are the biggest buyers of dollars, requiring USD 8-8.5 billion every month for the import of an average 7.5 million tonne of crude oil.

In August, the Reserve Bank had opened a special window to help the three state-owned oil marketing companies – Indian Oil Corp (IOC), Hindustan Petroleum Corporation Ltd (HPCL) and Bharat Petroleum Corporation Ltd (BPCL) – to meet daily foreign exchange requirements and buy dollars directly from RBI.

The rupee has recovered over 8 per cent since August 28, when it fell to a record low of 68.85 to the dollar. The gain in rupee had followed optimism that the US Federal Reserve would delay the tapering of its bond buying programme.

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