The rupee slid to 97.15 against the US dollar in intraday trade on Wednesday, its weakest level since May 20, as investors reacted to the Reserve Bank of India’s policy decision.

The RBI raised its key repo rate by 25 basis points to 5.50 per cent, its first hike since February 2023, and shifted its stance to calibrated tightening from neutral. The rupee later traded at 96.7750 on Thursday, according to Reuters, just 18 paise short of its all-time low of 96.96.

RBI Governor Sanjay Malhotra said the rupee may be undervalued by several estimates, including the real effective exchange rate. He said the central bank would ensure orderly movement in the currency rather than target a particular level.

Higher crude oil prices are adding to the pressure. Brent crude has climbed above 102 dollars a barrel, and India imports most of its oil. Goldman Sachs called the hike hawkish and expects another 25-basis-point rise in December.