Indian rupee risks more losses after post-RBI policy slide, higher oil adds to woes

The Indian rupee slipped 0.4 per cent on Wednesday, reaching 96.7750 per dollar, its lowest point since mid-May and just 18 paise short of its record low of 96.96, according to Business Recorder. That move came after the Reserve Bank of India raised rates and altered its policy stance, a shift some economists described as hawkish, leaving the currency vulnerable to further declines.

The move was unexpected, since the central bank had seemed content with a gradual decline in recent days and external conditions had not deteriorated significantly. A dealer at a private lender attributed the fall to domestic positioning and hedging following the policy decision, and said Thursday's session would show whether the RBI would accept a weaker rupee.

Goldman Sachs described the RBI action as a hawkish hike, citing the change in stance and the bank's communication, and forecasts another 25 basis point rise in the repo rate in December. Oil is adding to the strain, with Brent crude gaining more than $2 in Thursday trading to move above $102 per barrel as supply worries tied to the Middle East persisted. Vessels in the Gulf and passing the Strait of Hormuz face growing attacks, and India imports most of its crude.