Rupee slips to 96.45 as investors await RBI policy decision

The rupee opened at 96.37 at the interbank foreign exchange market before weakening to 96.45 against the US dollar, marking a 10 paise decline from Tuesday's close of 96.35. The currency has come under persistent pressure as foreign investors continue to pull funds from domestic equities, while the US dollar index holds firm above 102, maintaining multi-month highs that support dollar strength globally.

Forex traders attributed the rupee's weakness to the combination of foreign capital outflows and broad-based dollar strength. The rupee has depreciated more than 2 per cent over the past month, reflecting broader headwinds facing the domestic currency. Market participants are closely monitoring crude oil price movements and their impact on India's import bill and current account dynamics.

All eyes are now on the RBI's monetary policy decision scheduled for Wednesday. Analysts widely expect the central bank to raise the benchmark repo rate by 25 basis points, though some forecasters see an outside chance of a more aggressive 50 basis point increase. Additionally, the RBI may raise the cash reserve ratio by 100 basis points to 4 per cent to manage excess liquidity in the banking system.

Investors are particularly keen to hear the RBI's assessment of the rupee's recent weakness and any policy measures the central bank may adopt to support the currency. The monetary policy stance will provide crucial signals on the RBI's inflation-fighting priorities and its approach to managing currency stability alongside liquidity conditions.