India raised import duties on gold and silver sharply to defend the rupee and ease pressure on foreign-exchange reserves, multiple media outlets reported Wednesday, citing official orders.
The government increased total import taxes to about 15% from 6%, combining a 10% basic customs duty with a 5% agriculture infrastructure and development levy, Bloomberg said citing two official orders.
The move aims to cut demand in the world's second-largest bullion market and follows a rare weekend appeal from Prime Minister Narendra Modi to avoid gold purchases and cut non-essential foreign travels, the report noted.
Gold ranks as India's second-largest import after crude oil, and higher import costs have widened foreign outflows, adding pressure on the rupee, which has hit record lows in recent sessions, Bloomberg said.
The Reserve Bank of India has stepped up interventions in currency markets, with foreign-exchange reserves easing to $690.7 billion as of May 1, the lowest in over a month, Bloomberg reported. The RBI has also tightened rules on bank forex positions to curb speculation, it added.
Markets reacted to the move, with shares of Kalyan Jewellers slipping over 2% in Wednesday's trade.
(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)