Rupee falls 22 paise to 96.57 against US dollar after RBI rate hike
The Indian currency came under pressure despite the RBI’s tightening stance, with the dollar and crude prices gaining in early trade.
The rupee experienced a 22 paise decline against the US dollar, settling at 96.57 on Wednesday following the Reserve Bank of India's (RBI) rate hike. The central bank increased the key benchmark policy rate by 25 basis points to 5.5 per cent, aiming to curb rising inflation. Market experts attributed the depreciation to mounting cyclical inflation risks and the RBI's shift towards a calibrated tightening approach.
The rupee opened at 96.37 in the interbank foreign exchange market but lost ground, falling to the current level. On Tuesday, the rupee closed at 96.35 against the US dollar. The Bank's October hike signals the RBI's hawkish stance, with higher inflation forecasts and a calibrated tightening bias supporting the currency's resilience to external shocks.
The RBI's rate hike, the first since February 2023, contrasts with the previous policy of maintaining rates. Meanwhile, the dollar index and Brent crude prices remained higher, while domestic equities faced a decline in the Sensex and Nifty.
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