The Indian rupee fell to a five-month low and neared a record low on Wednesday despite an interest rate hike and signals about further monetary tightening, with traders saying the policy was not hawkish enough to support the Asian currency. The Reserve Bank of India raised the policy repo rate by 25 basis points to 5.5%, marking the first rise in nearly four years, ?and signalled more hikes by changing its stance to "calibrated tightening" from "neutral". India has joined major central banks in raising rates as higher oil prices triggered by the Iran war fuel inflation, squeeze purchasing power and weigh on currencies. Weak monsoon rains linked to El Niño have compounded price pressures in Asia's third-largest economy. The rupee gave up early session gains to hit a low of 96.8450 per dollar, close to its record low of 96.96 hit on May 20, before ending 0.4% lower at 96.7750. Shares in Mumbai snapped two days of gains while bond yields rose modestly. The RBI now expects inflation at 5.2%, up from its earlier forecast of 5%. Core inflation, which excludes volatile food and fuel prices, is seen at 4.4% from 4.3% earlier. A broadly firmer dollar dragged the rupee alongside routine demand from corporates and bids related to portfolio outflows. The dollar-rupee forward premiums soared on Wednesday, with traders bracing for more sell/buy FX swaps by the Reserve Bank of India after ‌the central bank announced no new liquidity-withdrawal measures at its policy meeting. Spot USD/INR up 0.28% at 96.70, within striking distance of its all-time high of 96.96. Sterling scaled a 16-month high against the euro on Wednesday as France's fiscal concerns continued to weigh on the single currency, although the pound weakened against a broadly stronger dollar.  The euro fell ‌0.27% to 84.49 pence, its lowest level since June 2025, extending its losing streak to a ninth straight session. Against the dollar, the euro slumped 0.6% to 1.1199, weighed down by worries about France's fiscal position ahead of the 2027 presidential election.The ?pound weakened 0.3% to 1.3239 against a broadly firmer dollar as rising oil prices supported the greenback. Against the Japanese yen , the dollar edged up 0.03% to 158.16. The Bank of Japan's new policymaker, Ayano Sato, said in an interview with the Kyodo news agency that she supports the idea of raising interest rates in several stages. Brent crude lingered around $100 per barrel as ?the market weighed supply constraints from a storm heading for US oil-producing regions and attacks by Yemen's Iran-backed Houthis on Saudi Arabia. US crude dipped 0.9% to $88.63 a barrel.Gold prices slid to a two-month low on Wednesday, as a stronger dollar and elevated US ‌Treasury yields reduced the appeal of the non-yielding metal. Spot gold fell 1.2% to $4,113.89 per ounce by 2:12 p.m. EDT (1812 GMT), touching its lowest level since August 5. US gold futures for December delivery settled 1.1% lower at $4,140.70. Spot silver eased 3% to $59.86 per ounce, platinum fell 3.9% to $1,635.04, and palladium lost 4% to $1,125.70.

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