Gold importers in India shied away from placing new deals as the weaker rupee post the budget kept the downside in prices limited,though importers breathed a sigh of relief as the finance minister maintained a status quo on import duties.
India held its gold import duty unchanged in Thursday’s national budget,defying industry expectations that the world’s biggest bullion buyer would increase rates to curb demand and rein in a record current account deficit.
“We are saved this time and it’s some breathing time,” said a dealer with a private bullion importing bank,adding “activity is too low looking at the way rupee is behaving.”
The most-active gold contract for April delivery on the MCX was 0.21 percent lower at 29,681 rupees per 10 grams following global leads,though a weaker rupee kept the downside limited.
The Indian rupee weakened sharply on Thursday,retreating from a three-week high hit earlier,after the 2013/14 budget increased spending despite keeping the fiscal deficit targets in place,while measures to attract foreign flows were seen as limited.
The rupee plays an important role in determining the landed cost of the dollar-quoted yellow metal.