Justifying the hike in customs duty on gold in the Budget, Finance Minister Pranab Mukherjee on Tuesday said its huge imports cause strain on the balance of payment and affect exchange rate, but it does not have any direct bearing on the forex reserve.
"The import of gold of such magnitude strains balance of payments and affects exchange rate of rupee through impacting supply-demand balance of foreign exchange," Finance Minister Pranab Mukherjee said in the Rajya Sabha during Question Hour.
However, he added that such imports do not have a direct bearing on foreign exchange reserves, as RBI intervenes in the foreign exchange market through purchase/sale
Will not leave UPA; but don't humiliate us: Mamata
Pranab 'confident' of keeping subsidies low
RBI asks banks to update Al Qaida list
Budget 2012: Excise duty on cars increased by 2 per cent
New railway minister's qualification: Loyalty to Mamata