Rupee Edges Higher To 95.61 Against U.S. Dollar On Gold Duty Hike

The rupee opened 2 paise higher at 95.61 against the U.S. dollar on Wednesday, 13 May, helped by higher import duties on gold and silver. However, gains in the domestic currency remained limited due to elevated crude oil prices and stronger inflation trends in the U.S., which continued to weigh on emerging market currencies.

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Gold And Silver Duty Hike Supports Currency

The early strength in the rupee came after the government increased import duties on gold and silver from 6% to 15%. The move is aimed at curbing demand for precious metals and reducing pressure on foreign exchange reserves.

India, which is the second-largest consumer of gold and silver globally, making precious metals a key factor in the country’s trade deficit. The higher duties are expected to reduce import volumes and offer support to the rupee.

The decision also aligns with efforts to encourage lower gold consumption domestically, in line with the government’s broader strategy to strengthen external balances. The rupee has already weakened by more than 5% since the onset of recent geopolitical tensions, largely driven by higher crude oil import costs.

Inflation Trends Remain A Key Factor

On the domestic front, India’s retail inflation rose to 3.48% in April, compared to 3.40% in March, marking the sixth consecutive monthly increase. The figure, however, was lower than the expected 3.80%.

Food inflation climbed to 4.2% from 3.87%, showing a gradual rise in cost pressure across essential commodities. Despite this upward trend, analysts consider softer-than-expected inflation reading could allow the Reserve Bank of India to maintain interest rates unchanged in the near term going forward outlook.

In contrast, inflation in the U.S. has remained elevated. Headline inflation rose to 3.8%, the highest since 2023, while core inflation increased to 2.8%, both above market estimates. Rising energy costs linked with geopolitical tensions have led this increase. 

Rupee Outlook And Technical Levels

According to Amit Pabari, Managing Director at CR Forex Advisors, commodity prices such as crude oil and gold have become central to currency movement in import-dependent economies like India. He noted that these factors are now closely tied to the rupee’s performance.

On the technical side, the USD/INR pair is expected to find strong support in the 94.50–94.80 range, while resistance is seen in the 95.70–95.80 zone. Market participants closely watch these levels for near-term directional cues movement signals.

The rupee is expected to stay sensitive to global crude oil prices, inflation trends, and trade-related policy measures as investors evaluate balance between domestic support steps and external economic pressures levels.