Indian Banks Restart Gold and Silver Imports After Month-Long Suspension
Indian banks resume gold, silver imports after month-long halt over 3% levy
Business Standard
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Indian banks have resumed gold and silver imports after a month-long halt due to a 3% customs levy. This resumption is expected to increase imports, widen the trade deficit, and exert further pressure on the Indian rupee, which is struggling this year. Prime Minister Narendra Modi has urged citizens to refrain from gold purchases to conserve foreign exchange reserves.
- 01Indian banks resumed gold and silver imports after paying a 3% customs levy.
- 02This move is anticipated to increase the trade deficit and pressure the Indian rupee.
- 03Prime Minister Narendra Modi has advised citizens to avoid gold purchases for a year.
- 04In May, banks cleared approximately 9 metric tons of gold and 34 metric tons of silver.
- 05Gold imports in April fell to a near 30-year low of about 15 metric tons.
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After a hiatus of over a month, Indian banks have resumed importing gold and silver by agreeing to pay a 3% customs levy. This decision is expected to boost gold imports, which could widen India's trade deficit and further weaken the rupee, currently one of Asia's worst-performing currencies. Prime Minister Narendra Modi has urged citizens to refrain from purchasing gold for a year to help preserve the country's foreign exchange reserves. In recent days, banks have cleared about 9 metric tons of gold and 34 metric tons of silver after paying the integrated goods and services tax (IGST). Despite the resumption, demand remains weak, leading to discounts of up to $17 per ounce over official domestic prices. India's gold imports in April were estimated to have dropped to a near 30-year low of about 15 metric tons, as banks halted shipments due to the IGST demand.
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The resumption of gold and silver imports may lead to increased availability of these metals in the market, but the pressure on the rupee could affect import costs, potentially raising prices for consumers.
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