Sources: The Reserve Bank of India has requested state-owned oil refining companies to reduce their purchases of spot US dollars.

Three sources revealed that the Central Bank of India has urged state-owned oil refining companies to reduce their purchases of US dollars in the spot market, and to meet foreign exchange demands through special credit arrangements. This move reopens the relevant measures used in the early stages of the Russia-Ukraine conflict to alleviate pressure on the Indian Rupee. Soaring oil prices and massive outflows of foreign investment portfolio funds have severely affected the Indian currency. The Rupee has fallen by over 3% this year, hitting a historic low and becoming the worst performing major currency in Asia. Two sources stated that the use of special credit tools will reduce the demand for US dollars from oil refining companies, which will help alleviate the pressure of Rupee depreciation. Oil refining companies are the main buyers of US dollars for paying crude oil import costs. After the opening of the Indian market on Friday morning, the Rupee rose by 0.4% against the US dollar to 92.80, reaching its strongest level in a week. Sources mentioned that state-owned oil refining companies have been instructed to use this credit limit through the State Bank of India. The State Bank of India is the largest state-owned bank in India. One source pointed out that since this large state-owned bank already handles a large amount of commercial fund flows, concentrating the oil-related foreign exchange needs through this bank helps reduce the impact on the overall market.