Rupee slumps 43 paise to close at 96.78 against US dollar

The rupee slumped 43 paise to close at 96.78 (provisional) against the US dollar on Wednesday, after the Reserve Bank of India raised the key benchmark policy rate by 25 basis points to 5.5 per cent. Market analysts said the RBI’s rate hike reflects rising cyclical inflation risks, while the shift in stance to ‘calibrated tightening’ alongside higher growth and inflation projections highlights the MPC’s hawkish approach. At the interbank foreign exchange market, the rupee opened at 96.37 and traded in the range of 96.34-96.84 before eventually settling at 96.78 (provisional), down 43 paise from its previous close. On Tuesday, the rupee settled at 96.35 against the US dollar.

“The rupee slid, logging its second-weakest close and trailing most Asian peers after RBI’s hawkish note amid renewed inflation worries jolted sentiment.” A rebound in crude oil prices and a wave of risk aversion added pressure, leaving dollar bulls firmly in control.