INR vs USD: Rupee recovers 16 paise from all-time low against dollar as govt raises gold import duty

Forex traders said market participants are expecting some resilience in the dollar-rupee pair as gold importers curb their demand.

The Indian government raised import tariffs on Gold and Silver to 15% from 6% to curb overseas purchases of the metals and ease pressure on the Country’s FX reserves.

However, elevated crude oil prices and the strength of the American currency in the overseas market weighed on investor sentiment.

At the interbank foreign exchange market, the rupee opened at 95.52, registering a gain of 16 paise from its previous all-time closing low.

On Tuesday, the rupee depreciated 40 paise to close at a fresh all-time low of 95.68 against the US dollar.

Traders said the hike in gold import tariff could bring down the demand for the yellow metal in the country, which is the World’s second-largest consumer of precious metals.

On Sunday, Prime Minister Narendra Modi urged people to avoid Gold purchases for a year to help protect foreign exchange, as India imports most of the precious commodities with hardly any production of its own.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading at 98.30, up 0.01%.

Brent crude, the global oil benchmark, was trading lower by 1.12% at $106.56 per barrel in futures trade.

On the domestic equity market front, stock markets rebounded in early trade. The 30-share SENSEX climbed 75.64 points to 74,614.51, while the NIFTY was up 17.10 points to 23,391.10.

Foreign Institutional Investors offloaded equities worth ₹1,959.39 crore on Tuesday, according to exchange data.

On the domestic macroeconomic front, retail inflation inched up to 3.48% in April mainly due to higher prices of gold and silver jewellery as well as some kitchen items, according to government data released on Tuesday.

The Consumer Price Index (CPI)-based inflation, with base year 2024, was 3.40% in March, 3.21 per cent in February, and 2.74% in January.

The data released by the National Statistics Office (NSO) showed that inflation in the food basket was at 4.20% in April, up from 3.87% in the preceding month.