FX.co ★ Rupee Stabilizes as India Raises Gold Tariffs

The Indian rupee stabilized at around 95.5 per dollar, halting its slide after hitting record lows as authorities intensified efforts to shore up the economy amid mounting external pressures. In a key step, India sharply raised import duties on gold and silver, lifting the effective tax rate to about 15% from 6% to curb bullion demand, reduce imports, and narrow the trade deficit. The decision underscores growing concern over pressure on foreign exchange reserves as higher oil prices drive up import costs. Policymakers are also weighing additional measures, including restricting non-essential imports and adjusting fuel prices, to mitigate risks stemming from the Middle East conflict. Despite the heightened market volatility, S&P Global Ratings argued that fears of foreign capital outflows may be overstated, pointing to India’s strong investment prospects and sufficient buffers to manage a wider current-account deficit. Recent data showing a rebound in foreign direct investment further suggests that investor confidence remains resilient.