Indian Rupee Falls To Record Low After RBI Rate Decision

(RTTNews) - The Indian rupee weakened against the U.S. dollar in the European session on Wednesday, after the Reserve Bank of India raised its benchmark interest rates by 25 basis points and changed its monetary policy stance to calibrated tightening.

The Monetary Policy Committee, governed by Sanjay Malhotra, unanimously decided to hike the policy repo rate to 5.50 percent from 5.25 percent. This was the first hike in nearly four years.

The MPC also decided to change the stance to "calibrated tightening" from "neutral".

"It only signals that given the current conditions, rate cuts are off the table in the near term and policy action ahead can only be a rate hike or a pause, depending on the evolving conditions and the outlook," the bank said in a statement.

The governor said that there is some evidence of elevated inflation expectations and generalization of inflation but there are limited signs of supply side pressures getting embedded in pricing behavior.

CPI inflation for 2026-27 was estimated at 5.2 percent, up from the previous forecast of 5.0 percent. Core inflation was projected at 4.4 percent.

Investors focus on the Federal Open Market Committee (FOMC) minutes of the September policy meeting,due to be released later in the day. In the latest policy meeting, the Fed hiked interest rates by 25 basis points (bps) and signaled at least one more this year.

In the European trading today, the rupee fell to a historic record low of 97.15 against the U.S. dollar, from an early high of 95.90.

Looking ahead, U.S. EIA crude oil data and U.S. consumer inflation expectations for September are slated for release in the New York session.

At 2:00 pm ET, the US Federal Reserve is due to release minutes of its September policy meeting.