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 State Bank of India (SBI), reviving a measure used during the Ukraine war to manage currency volatility, three sources told Reuters.A surge in oil prices and heavy foreign portfolio outflows have weakened the rupee, which has fallen more than 3% this year to record lows, making it Asia’s worst-performing major currency.Using the credit line would reduce dollar demand from refiners–among the largest buyers of the US currency for oil imports and help stabilize the rupee, two of the sources said.The facility is available to Indian Oil Corp, Hindustan Petroleum Corp and Bharat Petroleum Corp, which together account for about half of India’s 5.2 million barrels per day refining capacity.Refiners have also been encouraged to route daily dollar purchases through SBI instead of multiple banks, one of the sources said, adding that consolidating flows could help reduce overall market impact.Refiners can either buy dollars at the RBI reference rate or draw on the credit line for their foreign exchange needs, a second source told Reuters.Three spot foreign exchange traders, separate from the sources cited earlier, told Reuters they had observed a decline in oil companies’ activity in the spot market in recent days.The RBI and SBI did not respond to emails seeking comment, while refiners also did not respond.The measures, which sources said have been in place for about two weeks, come as the RBI looks to support the rupee amid pressures linked to the Iran war.The rupee had weakened past 95 per dollar in late March but has since recovered about 2% following 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.
