The currency found some support after the government raised import duties on gold and silver to 15% from 6%, a move aimed at curbing imports, containing the widening trade deficit, and easing pressure on the rupee amid elevated crude oil prices linked to the Iran conflict.
The rupee has weakened more than 5% since the Iran war began, pressured by rising oil prices and concerns over India’s external balances.
India is the world’s second-largest consumer of precious metals, and higher duties are expected to reduce demand for gold and silver imports, which could help conserve foreign exchange reserves.
The tariff hike came shortly after Prime Minister Narendra Modi urged citizens to avoid buying gold for a year to help protect the country’s forex reserves.
Market participants said the measures were partly anticipated after recent reports suggested the government could announce steps to support the rupee. However, traders said the impact may remain limited because of persistent external pressures.
Global factors continued to weigh on sentiment after US consumer inflation accelerated in April, with headline inflation rising 3.8% year-on-year, largely driven by higher energy costs. Following the data, investors pushed back expectations of a US Federal Reserve rate cut until after December 2027.
The benchmark 10-year U.S. Treasury yield rose to 4.47%, increasing the appeal of dollar assets and adding pressure on emerging market currencies, including the rupee.
–With Reuters inputs
First Published: May 13, 2026 9:13 AM IST
