INR vs USD: Rupee Shows Relief at 95.69 After Losing Streak As Bullion Duty Hike Comes To Its Rescue

Mumbai, May 13:The rupee traded slightly weaker on Wednesday, pausing its losing streak, as the government’s decision to raise import duties on gold and silver to 15% from 6% came to its rescue.

The duty hike is aimed at discouraging bullion imports and easing pressure on foreign exchange reserves. To be sure, elevated oil prices, despite a slight ease in their rates, continued to weigh on the rupee.

At the time of writing, the rupee was down five paise at 95.69 versus the dollar, touching a low of 95.73 and a high of 95.51 during the day. At open, the rupee began at 95.61 which is two paise higher than its record closing low of 95.63 logged in the previous session. Yesterday, the rupee had slumped to 95.74 during trade asclimbing crude and US-Iran tensionstook over sentiment.

Policy Relief

And now that the higher precious metal tariffs are coming to the rescue, markets are viewing the policymove as supportive for the rupee in the near term. Gold forms a significant part of the country’s import basket, and any measure that curbs demand for overseas purchases is generally seen as positive for the balance of payments, which in turn helps the rupee gain on the currency markets.

The rupee edged higher in early trade, reflecting relief after several sessions of weakness. The policy move may help reduce pressure on reserves if it translates into lower import volumes. However, the impact on the currency will likely depend on sustained trends in trade flows rather than a single policy change.

Oil Elevated

However, oil prices remained elevated. Crude oil is India’s largest import item, and sustained strength in energy prices tends to weigh on the currency by increasing dollar demand from oil refiners and widening the trade deficit. Even small fluctuations in global crude benchmarks can significantly influence rupee movement, given India’s reliance on imported energy.

Global factors also remain in focus. Investors are closely tracking inflation data and expectations around major central banks’ policy paths, particularly the U.S. Federal Reserve. Signals of prolonged higher interest rates in the United States could strengthen the dollar and cap gains for emerging market currencies, including the rupee.

The rupee’s near-term trajectory will likely depend on a combination of crude oil trends, foreign portfolio flows, and broader global risk sentiment. Any improvement in global equities or easing in oil prices could provide additional support, while renewed strength in the dollar may limit appreciation.

Source:

• spot rates from https://www.moneycontrol.com/markets/currencies/