The rupee weakened to 96.7750 against the US dollar on Wednesday, falling 0.4 per cent and moving within 18 paise of its all-time low of 96.96.

The slide followed the Reserve Bank of India’s surprise policy decision on Tuesday, when it raised the repo rate by 25 basis points to 5.50 per cent and shifted its stance to calibrated tightening.

Analysts say the currency faces a double blow. Goldman Sachs described the RBI’s tone as hawkish and said it now expects another 25 basis point hike in December. At the same time, Brent crude has surged past 102 dollars a barrel after fresh attacks on Gulf shipping lanes.

The combination of a hawkish central bank and costlier oil imports has investors worried about both growth and the trade deficit. The rupee had touched an intraday low of 97.15 during the session before recovering slightly.

SBI Research has flagged the possibility of a 50 basis point jumbo hike in December, which would take the repo rate to 6 per cent. Such a move would offer some support to the currency but could slow credit growth further.