Rupee Hits Record Low Of 95.80 Despite Duty Hike on Gold Imports

The Indian rupee fell to a record low against the US dollar on May 13, 2026, reflecting sustained external pressures. The domestic currency touched 95.80 despite initial gains during early trade.

Market participants closely tracked factors such as crude oil prices, foreign flows, and global currency movements. The development highlights ongoing stress in India’s external sector dynamics.

Intraday Movement and Recent Trend

The rupee opened stronger on May 13, 2026, appreciating by 16 paise from its previous close. This initial gain was driven by expectations that higher import duties on precious metals could reduce dollar outflows.

However, the currency reversed direction later in the session and weakened sharply. On May 12, 2026, the rupee had already declined by 40 paise to close at 95.68, signalling persistent depreciation pressures.

Impact Of Gold Duty Hike on Forex Flows

The government recently increased import duties on gold and silver from 6% to 15% to manage foreign exchange outflows. The move was expected to curb demand for precious metal imports, which significantly contribute to the import bill.

By discouraging such imports, policymakers aimed to ease pressure on forex reserves. However, market reactions suggest that this measure provided only limited and temporary support to the rupee.

External Pressures from Oil and Dollar Strength

Elevated crude oil prices continued to weigh on the rupee, given India’s reliance on energy imports. Brent crude traded at around $106 per barrel, maintaining pressure on the country’s import bill.

At the same time, the US dollar remained firm, with the dollar index hovering near 98.30. A stronger dollar typically leads to capital outflows from emerging markets, adding to currency depreciation pressures.

Role Of Capital Flows and Market Sentiment

Foreign institutional investors (FIIs) remained net sellers in the equity market, further impacting currency movements. On May 12, 2026, FIIs sold equities worth ₹1,959.39 crore, according to exchange data.

Outflows from domestic equities tend to increase demand for US dollars, contributing to rupee weakness. Market sentiment also remained cautious amid global uncertainties, reinforcing the downward pressure on the currency.

Read More: India Rebalances Forex Use as Duty Hike Targets Non-Essential Imports.

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Conclusion

The rupee’s decline to a record low reflects a combination of domestic and global factors affecting currency stability. While policy measures such as higher gold import duties aim to manage forex outflows, broader macroeconomic forces continue to dominate.

Rising oil prices, a strong dollar, and foreign capital outflows remain key drivers of currency movement. The development underlines the complex interplay between fiscal measures and global market conditions in determining exchange rate trends.

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