The Reserve Bank of India has asked state-run oil refiners to reduce spot dollar purchases and use a special credit line for their foreign exchange needs, as part of efforts to ease pressure on the rupee, according to a Reuters report.The central bank has urged refiners to access the facility through the State Bank of India (SBI), reviving a measure used during the Ukraine war to manage currency volatility, three sources told Reuters.Rising oil prices and massive foreign portfolio outflows have weakened the rupee, which has fallen more than 3% this year to a record low, making it Asia’s worst-performing major currency.Using the credit line would ease dollar demand from refiners, among the US currency’s biggest buyers for oil imports, and help stabilize the rupee, two sources said.The facility is available to Indian Oil Corporation, Hindustan Petroleum Corporation and Bharat Petroleum Corporation, which together account for about half of India’s refining capacity of 5.2 million barrels per day.Refiners have been encouraged to make daily dollar purchases through SBI instead of multiple banks, one of the sources said, adding that strengthening the flows could help reduce the overall market impact.Refiners can either buy dollars at the RBI reference rate or use the credit line for their foreign exchange needs, a second source told Reuters.Separate from the sources cited earlier, three spot foreign exchange traders told Reuters they had seen a decline in activity by oil companies in the spot market in recent days.RBI and SBI did not respond to emails seeking comment, while refiners also did not respond.The measures have been in place for about two weeks, sources said, as the RBI seeks to support the rupee amid pressures linked to the Iran war.The rupee had weakened above 95 per dollar in late March but has fallen by about 2% after steps by the central bank including selling dollars from its foreign exchange reserves. The currency was last quoted at 93.20 per dollar on Thursday.
