Oil PSUs buying dollars in market, rupee to recover in a day or two: FinMin

The Finance Ministry has said the Indian rupee will stabilise within a couple of days as inflows of NRI deposits and export proceeds are likely to be strong.

The domestic currency fell by 2 paise, or 0.03 per cent, to 62.41 against the US dollar on Thursday.

"Strong FCNR (B) inflows, export realisation will strengthen rupee... Rupee will stabilise in 1 or 2 days," Economic Affairs Secretary Arvind Mayaram said.

To attract dollars, the Reserve Bank of India (RBI) had in September opened a special concessional window for swapping foreign currency non-resident (banks) (FCNR-B) deposits and overseas foreign currency borrowings for banks.

So far, $15.2 billion has come from this window.

The window will remain open till the end of this month, and many analysts have pegged the inflows from these instruments to be in the range of $20-25 billion.

Mayaram also said that the current weakness in the rupee was due to shifting part of dollar purchases by oil companies to open market. "... 30-40 per cent of OMC demand has moved to market," he said.

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

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

The plight of the rupee started after the US Federal Reserve in its May 24 meeting hinted at shutting the easy money tap-repurchase of $85 billion worth of T-bills every month. This had led to a spike in US interest rates, enticing FIIs to plumb for better returns back home by exiting emerging markets.

FIIs had sold domestic debt worth more than $52 billion so far in 2013.

The rupee has recovered over 10 per cent since August 28, when it fell to a record low of 68.85 to the dollar. The gain in rupee followed optimism that the US Federal Reserve would delay the tapering of its bond buying programme.