FX.co ★ Rupee Under Pressure Despite RBI Hike

The Indian rupee traded around 96.58 per dollar, hovering near record lows, pressured by a stronger US dollar, rising global bond yields, and persistent foreign equity outflows. Brent crude advanced above $101.50 a barrel, heightening concerns about India’s import bill and dampening investor appetite for emerging-market assets. The rupee’s slide was partly contained by the Reserve Bank of India’s 25-basis-point hike in the repo rate to 5.50%, its highest level in a year and the first increase since February 2023. The decision, which matched market expectations, accompanied a shift in the RBI’s policy stance to “calibrated tightening” in response to mounting inflation risks. In addition, the central bank has been deploying reverse repo operations, open-market bond sales, and sell-buy FX swaps to absorb excess liquidity, while state-owned banks were reportedly intervening in the market to help stabilize the rupee.