Rupee Recovers 16 Paise From All-Time Low to 95.52 Against US Dollar in Early Trade

mumbai:The rupee rose from an all-time low to 95.52 against the American currency on Wednesday on hopes that the demand for the US dollar will decrease due to import curbs. Market participants expected some flexibility in the dollar-rupee pair as gold importers cut their demand, Forex traders said.

The Indian government has increased import duties on Gold and Silver from 6 percent to 15 percent in a bid to curb overseas purchases of metals and ease pressure on the country’s foreign exchange reserves.

However, rising crude oil prices and the strength of the American currency in the foreign market weighed on investors’ confidence.

In the interbank foreign exchange market, the rupee opened at 95.52, gaining 16 paise from its all-time low close.

On Tuesday, the rupee lost 40 paise value against the US dollar and closed at an all-time low of 95.68.

Traders said the increase in gold import tariff could reduce demand for the yellow metal in the country, which is the world’s second-largest consumer of the precious metal.

“This move will also help contain the CAD and help the rupee to some extent,” said Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP.

Prime Minister Modi on Sunday urged people to refrain from buying Gold for a year to help preserve foreign exchange as India imports most of the precious commodity and its own production is almost non-existent.

Meanwhile, the dollar index, which measures the strength of the dollar against a basket of six currencies, was traded at 98.30 with an increase of 0.01 percent.

Global oil reference Brent crude oil was traded at $106.56 per barrel, down 1.12 percent in futures.

In the domestic equity market, equity markets recorded a recovery in early trade. The 30-share Sensex rose 75.64 points to 74,614.51 points, while Nifty rose 17.10 points to 23,391.10 points.

Foreign Institutional Investors sold shares worth Rs 1,959.39 billion on Tuesday, stock exchange data showed.

In domestic macroeconomic terms, retail inflation rose to 3.48 percent in April, mainly due to high prices of gold and silver jewelery as well as some kitchenware, according to government data released on Tuesday.

Inflation based on the Consumer Price Index (CPI) with a base year of 2024 was 3.40 percent in March, 3.21 percent in February and 2.74 percent in January.

Data announced by the National Statistics Office (NSO) showed that inflation in the food basket increased to 4.20 percent in April from 3.87 percent in the previous month.