The Government’s move on Wednesday to hike import duty on preious metals such as gold and silver to curb demand and curtail Dollar outflows did not bring respite for the Rupee, which closed at an all time low.
The Indian currency closed eight paise weaker at 95.71 per US Dollar as pricey crude oil prices, FPI sales in the domestic equity market and importer demand continued to pile pressure on it.
In a sign that the Indian currency (INR) may test the 96 mark in the next couple of trading session, going by the current rate of depreciation, intraday it tested a low of 95.8075 per US Dollar (USD).
The RBI is understood to have intervened in the market via Dollar sale by State-owned banks to decelerate the depreciating bias of the Rupee.
Brent ctude oil traded higher at about $107 a barrel amid increasing uncertainty about resolution of the West Asia war and opening of the arterial Strait of Hormuz. FPIs were net seller in the Indian equity markets
The Government early Wednesday upped the import duty on gold and silver to 15 per cent from 6 per cent, and on platinum to 15.4 per cent from 6.4 per cent. FPIs net sold equities aggregating $83.86 million, per NSDL data.
Tanay Dalal, SVP II – Business & Economic Research, Axis Bank, said: “While there do exist paths to keep the INR at desired levels, these might involve balancing BOP (Balance of Payments) by turning the capital account back to surplus (disincentivising outflows by increasing asset supply, forcing asset prices lower or increasing exit costs), while also reducing the current account deficit (forcing higher savings or lower investments – weaker growth).
“We continue to see the RBI smoothing the INR to a new fair value over time.”
Tata Mutual Fund, in a report, said unless geopolitical risks ease and crude prices retrace meaningfully, the rupee is likely to retain a depreciating bias, with implications for imported inflation.
“From a macro perspective, crude oil and gold remain India’s two largest imports by value, and a sustained ~50% rise in crude prices materially worsens external balances. Every USD 10/bbl increase in crude is estimated to add ~45 bps to CPI inflation and widen the current account deficit by 30–40 bps.
“Higher crude also impacts exports to and remittances from the Gulf, while the rupee has already moved past ₹95/USD, reflecting pressure on the balance of payments and forex reserves.” per the report.
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Published on May 13, 2026
