Rupee Crash Alert: INR Breaches 95/USD; What It Means For Gold Rate in India? Explained

Rupee Crash Alert: The Indian Rupee breached the 95/USD mark on Monday, marking its steepest fiscal-year decline in a decade. The sharp weakness in the domestic currency could weigh on gold jewellery buyers, as a weaker rupee makes dollar-priced gold more expensive in India.

The crude oil price rally due to supply constraints amid the Iran-US war is troubling the Indian Rupee. Additional factors like relentless selling by foreign investors in the Indian stock market and global uncertainty also impacted the Indian Rupee movement.
For investors and jewellery traders tracking gold prices in India, this could spell trouble, as a weakening rupee may push gold prices higher. Here's how.

Will Falling Indian Rupee Fuel Gold Price Rally?

Gold prices have declined significantly in March, after the beginning of the Iran-US war on February 28. March's fall was the result of crude oil price rally and concerns around overall inflation. Despite recent declines driven by global factors, a weakening rupee could limit downside or push prices higher domestically, experts highlight.

"When the Rupee weakens against the US Dollar, gold becomes more expensive in India even if global prices do not rise. For example, a 1-2% fall in the Rupee can directly increase domestic gold prices," explained Darshan Rathod, COO, Multyfi.

A falling Indian Rupee may fuel an upward trend in gold prices. "If interest rates stay high, gold may not rise much globally. But in India, even a weak Rupee can keep prices elevated," added Rathod.

Rupee Hits To Record Low

The Indian Rupee hit its record low mark on Monday, March 30. The domestic currency started Monday's trading session on a positive note after the Reserve Bank of India's cap on forex positions for banks. However the moment was short-lived as INR touched a low of 95.21 against US Dollar. Rupee's free fall in Monday's session forced the RBI to intervene in the second half of Monday's trading session, reported Reuters citing traders. The rupee ended Monday's session at 94.83 per USD.

Latest Gold Rates

The price of 24 karat gold in India surged by Rs 103 per gram to Rs 14,929 per gram, as per Goodreturns data at 11 am on Tuesday, March 31. The rate of 22 karat gold in India increased by Rs 95 per gram to Rs 13,685 per gram.

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