The government's measures to reduce demand for gold by hiking the import duty, has failed to provide any respite to the falling rupee. Surging gold imports has been responsible for substantial dollar outflow, putting the current account deficit and the Indian rupee closer to historic lows.

India's trade deficit has been rising, thanks to increasing oil and gold imports, which dealers say is ultimately responsible for the currency's downfall. The RBI too has not been intervening in the forex market to sell dollars and would step in, only if the currency gets more volatile.

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