The rupee depreciated 22 paise to 96.57 against the U.S. dollar in early trade on Wednesday (October 7, 2026), after the Reserve Bank of India raised the key benchmark policy rate by 25 basis points to 5.5%.

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, then lost ground and fell to 96.57, down 22 paise from its previous close.

On Tuesday (October 6, 2026), the rupee settled at 96.35 against the US dollar.

“The RBI’s October hike acknowledges that cyclical inflation risks are no longer benign. The change in stance also underscores the RBI MPC’s hawkish intent and is reinforced by upward revisions to growth and inflation forecasts,” said Radhika Rao, Senior Economist and Executive Director, DBS Bank.

“The combination of higher inflation forecasts and calibrated tightening should keep front-end rates biased higher. The policy shift is modestly constructive for the INR, as wider rate differentials and a tightening bias bolster the currency’s resilience to external shocks, even as a stronger US dollar remains a headwind,” Mr. Rao added.

The Reserve Bank of India on Wednesday (October 7, 2026) raised the key benchmark policy rate by 25 basis points to 5.5% in a bid to tame rising inflation amid continuing West Asia crisis.

A hike in the short-term lending rate (repo) by the RBI marks a reversal from its previous policy action.

The RBI last hiked the repo rate in February 2023, raising it by 0.25% to 6.50%. It kept the rate unchanged through 2023-24 before beginning its rate-cut cycle in 2025.

Meanwhile, the dollar index, which gauges the strength of the greenback against a basket of six currencies, was trading at 102.09, higher by 0.25%.

Brent crude, the global oil benchmark, was trading higher by 0.97% at $101.56 per barrel in futures trade.

On the domestic equity market front, Sensex was trading 149.14 points lower at 72,918.67, while the Nifty declined 93.45 points to 22,682.65.

Foreign Institutional Investors (FIIs) offloaded equities worth ₹2,961.30 crore on a net basis on Tuesday (October 6, 2026), according to exchange data.

Stock market benchmark indices Sensex and Nifty traded higher in early deals on Friday (June 5, 2026) ahead of the RBI’s monetary policy decision.

The 30-share BSE Sensex climbed 269.93 points to 74,629.94 in opening trade. The 50-share NSE Nifty went up by 62.4 points to 23,478.95.

From the 30-Sensex firms, Tech Mahindra, Bajaj Finance, Mahindra & Mahindra, Bajaj Finserv, Eternal and Adani Ports were among the biggest gainers.

Tata Steel, Trent, InterGlobe Aviation and Reliance Industries were among the laggards.

Brent crude, the global oil benchmark, traded at around $95.40 per barrel.

“There are some mild positive indications for the market today. There are signs of weakness in the AI trade in the U.S., South Korea and Taiwan and rotation away from tech stocks, but it is too early to say whether this will sustain. The focus of the market today will be on the monetary policy and the message from the RBI Governor,” V.K. Vijayakumar, Chief Investment Strategist, Geojit Investments Limited, said.

In Asian markets, South Korea’s Kospi, Japan’s Nikkei 225 index and Hong Kong’s Hang Seng index traded significantly lower, while Shanghai’s SSE Composite index quoted in positive territory.

U.S. markets ended mostly higher on Thursday (June 4, 2026).

“Global markets offered a contrasting picture overnight. While the Dow Jones surged nearly 900 points to a fresh record high, the rally was largely driven by a rotation away from technology stocks into broader cyclical sectors.

“Asian markets, however, failed to mirror Wall Street’s optimism, with South Korea’s Kospi declining nearly 5 per cent and other regional indices trading under pressure amid concerns over escalating tensions in the Middle East,” Hariprasad K, Research Analyst and Founder, Livelong Wealth, said.

Foreign Institutional Investors (FIIs) offloaded equities worth ₹4,447.06 crore on Thursday, according to exchange data.

On Thursday (June 4, 2026), the Sensex went up marginally by 13.84 points, or 0.02%, to settle at 74,360.01. The Nifty eked out a marginal gain of 10.95 points, or 0.05%, to end at 23,416.55.