The government’s decision on Wednesday to increase import duties on precious metals, including gold and silver, aimed at reducing demand and curbing dollar outflows, failed to provide any relief for the Indian Rupee, which closed at an all-time low. The currency ended the day eight paise weaker, standing at 95.71 per US dollar, under pressure from soaring crude oil prices, sales by foreign portfolio investors (FPI) in the equity market, and persistent importer demand.
Market indicators suggest that the Indian Rupee (INR) might approach the 96 mark in the coming trading sessions, given the current rate of depreciation, with an intraday low recorded at 95.8075 per US dollar. According to sources, the Reserve Bank of India (RBI) is believed to have stepped in to stabilize the currency by selling dollars via state-owned banks to mitigate the Rupee’s depreciating trend.
Brent crude oil prices rose to approximately $107 per barrel amid escalating concerns regarding the resolution of ongoing conflicts in West Asia and potential disruptions in the Strait of Hormuz. Additionally, foreign portfolio investors reported net sales totaling $83.86 million in Indian equity markets, as per data from the National Securities Depository Limited (NSDL).
On the same day, the government raised the import duty on gold and silver from 6% to 15% and increased the duty on platinum from 6.4% to 15.4%. Tanay Dalal, Senior Vice President II for Business & Economic Research at Axis Bank, remarked, “While there exist paths to keep the INR at desired levels, these might involve balancing the balance of payments (BOP) by turning the capital account back to surplus, which includes disincentivizing outflows, affecting asset prices or increasing exit costs, while also reducing the current account deficit to promote higher savings or lower investments—potentially at the expense of economic growth.”
Dalal added, “We continue to see the RBI smoothing the INR to a new fair value over time.”
A report from Tata Mutual Fund indicated that unless geopolitical tensions decline and crude prices significantly reverse, the Rupee is likely to maintain a depreciating bias, which may have implications for imported inflation. The report stated, “From a macro perspective, crude oil and gold remain India’s two largest imports by value. A sustained increase of approximately 50% in crude prices significantly worsens external balances. Each USD 10 per barrel rise in crude is estimated to contribute around 45 basis points to CPI inflation and widen the current account deficit by 30 to 40 basis points.”
The report further noted, “Higher crude prices also affect exports and remittances from the Gulf region, while the Rupee has already surpassed ₹95/USD, reflecting pressure on the balance of payments and forex reserves.”
Published on May 13, 2026.
