Impact of RBI measures: Rupee at 67/USD; IOC, BPCL, HPCL rally

NEW DELHI: State-run oil marketing companies such as ONGC, HPCL and BPCL bounced back with gains of 2-4% in morning trade on Thursday, after the Reserve Bank of India ( RBI) opened a forex swap window for OMCs to calm volatile forex markets.

Indian rupee also managed to bounce back on RBI measures and was trading around sub 67 levels after slipping to a fresh record low of 68.80 per dollar in the previous session. The partial-convertible rupee was trading at 67.20 against the US Dollar, up 160 paise from its previous close of 68.80 at 09:20 a.m.

At 09:20 a.m.; the BSE Oil & Gas index was trading 1.03 per cent higher as compared to 0.7 per cent gain in the S&P BSE Sensex.

ONGC rallied over 2.5 per cent in trade to touch its intraday high of Rs 250. The stock pared some of the gains and was trading 1.3 per cent higher at Rs 247.05.

BPCL which plunged the most among OMC stocks bounced back over 3 per cent in morning trade today to touch its intraday high of Rs 277. The stock, however, pared some of the gains and was trading 1.2 per cent higher at Rs 272.30.

HPCL also rallied over 3 per cent in morning trade after a steep fall in the previous session. The stock was trading 1.2 per cent higher at Rs 165.95.

OMC stocks came under considerable pressure in this week weighed down by sharp depreciation in rupee and rising international crude oil prices.

According to analysts, a depreciating rupee and rising international crude oil prices are like a double whammy on oil and gas companies as cost of importing oil beyond a historic high of Rs 7,000 per barrel.

"The oil import demand is also playing a role as far as the rupee is concerned. Crude oil prices have been going up pretty steeply in the last few weeks and with the rupee depreciating there is a double whammy kind of an impact," said Aditi Nayar, Economist, ICRA in an interview with ET Now.

This has put enormous pressure on India's current account deficit considering the fact that the country imports nearly 80 per cent of its oil demand, since the government pays for keeping domestic retail prices artificially low.

To address this issue and reduce volatility in the forex markets the Reserve Bank of India set up a swap window for oil companies to ease the pressure on the battered rupee.

Oil companies, which need copious quantities of dollars, can now go to this new window, thereby reducing some of the volatility in the market, ET reported.

The central bank will lend dollars to oil marketing companies for equivalent rupees which the marketing companies would return over a period of time.

"Under the swap facility, the Reserve Bank will undertake sell/buy USD-INR forex swaps for a fixed tenor with the oil marketing companies through a designated bank. The swap facility gets operationalised with immediate effect and will remain in place until further notice," said the central bank in a notification.

This is done with an aim to reduce volatility in the rupee market which has been losing ground against the dollar. Rupee has plunged nearly 25 per cent so far in the year 2013.