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Rupee Slips 50 Paise to 96.83 Per Dollar, Nearing Five-Month Low Amid Global Pressures
- •The Indian rupee weakened 50 paise to 96.83 against the US dollar on Wednesday, moving close to its record low of 96.96 set in May 2026.
- •The currency is down roughly 8 percent this year, ranking as the weakest-performing Asian currency due to a stronger dollar, high oil prices, and foreign outflows.
- •The Reserve Bank of India raised the repo rate by 25 basis points to 5.50 percent, shifting its monetary policy stance to calibrated tightening.
- •RBI Governor Sanjay Malhotra stated that various measures, including the real effective exchange rate, suggest the rupee is not overvalued and may be undervalued.
- •Persistent pressures from a rising dollar index, elevated Brent crude oil prices, and continuous foreign portfolio selling continue to weigh heavily on the domestic currency.
Key Questions Answered
The Indian rupee weakened 50 paise to 96.83 against the US dollar due to pressure from a stronger dollar index, elevated Brent crude oil prices, and continuous foreign fund outflows. Despite the RBI raising the repo rate by 25 basis points, global headwinds and foreign investors offloading Indian equities drove the currency near its five-month low.
The Reserve Bank of India raised the repo rate by 25 basis points to 5.50% and shifted its monetary policy stance from 'neutral' to 'calibrated tightening'. This marked the central bank's first rate hike since February 2023, signaling a hawkish approach to address rising cyclical inflation risks.
RBI Governor Sanjay Malhotra stated that while financial markets can be irrational in the short term, several measures, including the real effective exchange rate (REER), indicate that the rupee is not overvalued and may actually be undervalued. He noted that the currency will find its right value in the long run.
