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Informist, Wednesday, Oct. 7, 2026

By Divya Moolayattil

MUMBAI – The rupee is likely to open steady before the outcome of the Reserve Bank of India's Monetary Policy Commitee meeting at 1000 IST Wednesday, dealers said. A recovery in crude oil prices, high US Treasury yields, and foreign portfolio outflows may weigh on the Indian unit, they said.

The rupee is seen opening around 96.45 a dollar Wednesday, compared with the previous close of 96.4200. The domestic unit is expected to move in a range of 96.00-96.75 against the dollar during the day. Dealers said that a large band is possible given the policy outcome and the RBI MPC's tone for future guidance. 
 

"For a 25 bps rate hike, the market will not react much and will be around 96 levels only. A rate hike without a change in stance might trigger the rupee above 96.50 (a dollar). While a change in stance with the rate hike may bring the rupee towards 96 (a dollar)," a dealer at a private sector bank said. 

The RBI's Monetary Policy Committee is expected to raise the policy repo rate for the first time in over three years on Wednesday as price pressures show signs of broadening. Fifteen of the 19 economists and market participants polled by Informist said they expect the panel to hike the repo rate by 25 basis points to 5.50%. The remaining four expect the rate-setting panel to keep the repo rate unchanged at this meeting. Twelve economists expect the Monetary Policy Committee's policy stance to remain 'neutral' and two expect a shift to 'withdrawal of accommodation'. Investors will be focused on how policymakers assess inflation risks against a backdrop of abundant rupee liquidity and global risks including higher US yields.

However, market participants expect banks to buy the greenback at every dollar-rupee dip on behalf of importers and foreign portfolio investors, which could limit any sharp appreciation of the Indian unit.  

Brent Crude futures for December recovered above $101 a barrel after falling as low as $97.06 earlier in the session, which is expected to weigh on the currency. Brent crude resumed gains as traders assessed fresh shipping incidents around the Strait of Hormuz. 

The dollar index also rose sharply above 102 mark Wednesday as the 10-year Treasury yield was 5.31% Wednesday, still around its highest level in roughly two decades.

FORWARDS

The one-year dollar-rupee forward premium is expected to rise Wednesday as dealers expect the RBI to continue conducting dollar-rupee sell-buy swaps to drain surplus rupee liquidity from the banking system.

On an annualised basis, the premium on the one-year exact-period dollar-rupee forward contract is seen at 3.45-3.50% Wednesday. On Tuesday, it settled at 3.45%. On an absolute basis, the premium ended at 333.23 paise.

End

US$1 = INR 96.4200

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Akul Nishant Akhoury

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