India is the biggest gold importer in the world, with import figures adding to 933 tonnes in 2011, and accounting for 32% of global demand. India is set to raise import tax on gold further to 6%, after doubling from 2% to 4% last year; a measure that attempts to restrict demand and curb imports of the precious metal.
Predominantly, Indians buy gold as a hedge against inflation, but recently the high imports have weakened the rupee against major global currencies. With more stringent measures, the government hopes to correct the current account deficit and protect local sellers.
How will India’s latest policy affect the global gold market?
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