The Indian rupee slipped against the U.S. dollar on Friday after the government named banks authorized to resume gold and silver imports, triggering a sharp increase in dollar demand.
The rupee last traded at 92.97 to the dollar, down about 0.2% from earlier in the session, having briefly touched an intra-day low of 92.66. The move reversed earlier gains made on expectations that a pause in bullion imports would temporarily cap dollar buying.
Gold and silver import rules drive currency move
Several banks had halted new bullion import orders in recent days while awaiting an official directive on which institutions could handle the trade.
That uncertainty ended when the Directorate General of Foreign Trade issued a list of 15 authorized banks, covering major public and private sector lenders and granting permissions through March 31, 2029.
Once the list was published, importers quickly moved to hedge their exposures, stepping up dollar purchases and pushing up bids in the foreign exchange market. This renewed demand for dollars put fresh pressure on the rupee.
Key technical levels in focus
Market participants highlighted the 92.50–92.65 band as an important technical zone to watch for near-term downside support for the rupee.
Trading on Friday was dominated by flows linked to commodity trade rather than global risk sentiment or broader macro headlines, dealers said.
Impact on current account and growth outlook
The restart of bullion imports is significant for the currency because India is the world’s second-largest gold consumer, and these purchases consistently generate demand for U.S. dollars.
Higher gold and silver imports can push up the overall import bill, widening the current account deficit. Some analysts expect India’s current account gap to rise to about 2.1% of GDP in the next fiscal year, partly due to elevated import costs.
This structure forces importers to sell rupees and buy dollars for settlement, creating a steady source of downward pressure on the exchange rate.
Central bank firepower and possible intervention
Despite renewed pressure on the rupee, the Reserve Bank of India retains substantial room to act against abrupt currency moves.
Foreign exchange reserves climbed by $9.063 billion to $697.121 billion in the week ended April 3, 2026, giving the central bank the capacity to step in and supply dollars to the market if depreciation becomes disorderly.
Traders will be watching closely for any signs of such intervention, as the central bank has a track record of selling dollars to smooth sharp declines in the rupee.
Outlook: levels to watch and macro backdrop
In the coming weeks, traders are expected to monitor:
- the pace and volume of renewed bullion purchases, which will directly shape dollar demand
- the rupee’s behavior around the 92.50–92.65 support band
- any Reserve Bank of India operations in the spot or forward markets
The broader macro backdrop remains challenging. The Asian Development Bank projects India’s GDP growth to ease to 6.9% in fiscal year 2026, while the current account deficit is seen widening as import costs stay elevated.
A sustained move above 93.00 against the U.S. dollar would be viewed by some desks as a signal of further rupee weakness ahead, with a few analyst projections for the second half of the year pointing toward a wider trading range between 95.00 and 97.00.
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