INSUBCONTINENT EXCLUSIVE:
The rupee has depreciated about 12 percent year-to-date against the US dollar.India's government is planning to ask state oil firms to
lock in their crude futures purchase prices, a government source said on Thursday, anticipating a spike when United States sanctions on
Iran snap back again in November.The move would be another step to tackle a slide in the rupee, as oil prices are putting pressure on India,
which imports some 80 percent of its crude demand
Its currency has fallen sharply this year against the United States dollar, amid a wider sell-off in emerging markets."The futures should
be locked in when crude price is down," said the source, who is familiar with deliberations on the matter, adding the step should have been
taken earlier.The rupee, Asia's worst performing currency this year, has depreciated about 12 percent year-to-date against the United
States dollar, closing at 72.39 on Wednesday, after a record low of 72.99 on Tuesday
Markets were closed on Thursday.The government is expected to announce a set of measures to discourage non-essential imports to stem the
slump in the currency.Separately, a senior finance ministry official said there was a view that the rupee could weaken further in the next
two months if proposed steps failed to kill "speculation in the rupee market"."The gap between the announcement of steps and action is
creating a space for speculation
We have to stop this," said the official.Officials at oil companies said they were open to the idea of locking in futures if the government
asked.A senior official at Indian Oil Corp, a state-owned oil marketing company, said they were considering some options in terms of forward
He declined to give details saying this was "market sensitive information".An official at BPCL, another state-owned oil firm, said they were
trying to hedge margins, under a policy reviewed every quarter.BPCL is also studying a proposal to buy dollars directly from the Reserve
Bank of India instead of the market, in a bid to quell strong dollar demand that is denting the rupee."Whenever, there is sharp volatility
in exchange rates, this dollar window is opened
We're studying the proposal," he said.Another official at state-run HPCL said the government had not officially asked for it to examine
forward contracts."In case it is needed, or the government wants us to, we will then look into it," the HPCL official said.The officials
declined to be named as the proposals are still under consideration.India's risk-averse state-owned refiners have in the past been
reluctant to engage in futures trading or hedging strategies, fearing administrative blow-back if bets go wrong.The refiners typically buy
up to 70 percent of their oil needs through term deals and the remainder through spot markets.Unlike state refiners, private players
headline, this story has not been edited by TheIndianSubcontinent staff and is published from a syndicated feed.)
