Rupee to touch 45 a dollar

By Our Special Correspondent

Mumbai

July 6: The government of India had recently permitted the oil marketing companies (OMCs) to sell their oil bonds to the RBI as they have been unable to trade the oil bonds except at a very heavy discount of nearly eight to nine per cent.

The money supply in the system is likely increase about $20 billion on this account for the year.

This is expected to add to the weakness of the rupee which could touch Rs 45 to a dollar by September according to some oil analysts.

The Reserve Bank of India has opened a window for this facility at a discount of just around 2 per cent.

Mr Rugved Dhumale, senior manager at Macklai Financial & Commercial Services Ltd said "the rupee could move either way in the next three to six months. It could go to 45 to the dollar or come down to 42. It depends on the global uncertainties and crude prices."

The RBI has permitted each individual OMC to sell bonds worth Rs 1,500 crore on any given day to pay directly for oil purchases. This will weaken the rupee as it will fuel the inflationary environment.

The rupee moves because of a host of factors, and the oil bonds are yet another contributory factor, he said.

Mr Amit Anand, economist with K.R. Choksey Shares and Securities Private Ltd said the oil PSU had oil bonds totalling Rs 35,292 crore in the last fiscal.

This year the under-recoveries will total around Rs 1,35,000 crore that means much more dollars will be needed for refinance facilities.

According to reports IOC has already sold bonds worth 7,250 crore in June and will sell another Rs 3,000 crore in July.