Between end-February and end-March, about 50% of oil swaps will come due and, beyond that, another 50%. At this point, I can say that at least the re-payments for March are well covered, Rajan said in a conference call with analysts on Wednesday.
The rupee posted its second straight day of gains and ended stronger at 62.41/$ on Wednesday after hitting a 9-week low last week, triggered by a sell-off in most emerging market currencies.
The rupee had hit an all-time low of 68.85/$ in August 2013, owing to a huge pullout of dollars by foreign investors from the local debt market. The RBI had introduced special dollar swap window for oil companies in August 2013 to take away bunched-up dollar demand from the foreign exchange market in the wake of a rapidly weakening rupee.
Currency market participants fear that once the swaps come up for settlement, oil importers will have to buy dollars from the market to pay off the RBI.
However, Rajan said that oil importers have covered for such demand and, if need be, the RBI may opt to settle the swaps in rupee terms as well. Rajan reiterated that the country is better prepared for any volatility in currency markets now given that forex reserves have been shored up and the current account deficit brought down.