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OMC and FCNR swaps over; Test ahead for Forex Market
OMC and FCNR swaps over; Test ahead for Forex Market,
With official declaration finally arriving from the Reserve Bank of India (RBI) that Oil Marketing Companies (OMCs) are purchasing dollars directly from the Forex Market, the coming days have interesting developments in store. In addition, FCNR and Bank swaps have also seen a termination on November 30, 2013. Now, when the OMCs are accessing dollars directly from the market since the last week and not from the RBI anymore, forex analysts are keeping their fingers crossed hoping that it doesn’t lead to sudden volatility in the market as earlier.
In August 2013, in the wake of sudden depreciation in the rupee value by over 10 per cent to 68 per dollar, the RBI had arranged for a mechanism where the OMCs could source their dollar requirements, directly from it in the form of a swap, so as to reduce pressure on the already struggling forex market. The oil refiners were mandated to return the accessed dollars back to the RBI at a later date, when market conditions stabilize.
