The Repo Rate Hike: Inflation Gave the Cover, the Rupee Gave the Reason

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SumanSpeaks Independent Capital Markets & Geopolitical Intelligence RBI Policy Decoded The Repo Rate Hike: Inflation Gave the Cover, the Rupee Gave the Reason The RBI raised the repo rate by 25 basis points to 5.50 percent on 7 October 2026. With the rupee at ₹96.78 to the dollar, the Fed at 3.75–4.00 percent and bank credit growing near 18 percent, the fuller story is bigger than August CPI of 4.8 percent. The Reserve Bank of India raised the repo rate by 25 basis points to 5.50 percent on 7 October 2026. It is the first hike since February 2023, and the stance has moved from neutral to calibrated tightening. The rate decision was unanimous. The Governor cited inflation. The Monetary Policy Committee said the inflation outlook is no longer as comfortable as it was last year, and near-term rate cuts were taken off the table. That is the official story, and it is not wrong. But it is incomplete. Look at what surrounds the decision: a rupee near its record...
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~:How the textile sector is set to gain from Rupee Depreciation:~
A rising rupee doesn’t sink all the ships. Companies that traditionally earn in dollars while spending in rupees—such as textile exporters and the IT sector—are relatively better off. After, some solution of both the US and European Crisis, these two sectors would be the real gainers in the coming days, if the rupee continues to slide.. 
Now, most companies with substantial foreign earnings have been protecting themselves from the volatility of the past few years by hedging their exposures. Consequently, while they didn’t end up losing anything, they might have given away large part of potential gains from the depreciation of the rupee in the last couple of months. However, since the currency analysts are not bullish on INR in the short term and hence these textile and IT companies are set to make huge gains from this differential in the coming months.
Until 2003, software companies were raking in big money as the rupee kept depreciating annually beginning 1993. Starting 2004, currency fluctuations forced IT firms to turn to hedging to protect their earnings. But hedging comes at a cost—about 50-100 bps for the first 25% of the amount hedged. The higher the amount hedged, the higher the cost. Naturally, then, companies with lower hedges benefit the most as they have lower forex losses. Naturally, with no immediate coming of the INR in the range of Rs.45-47, those companies which has export oriented business have now started to spend less on hedging. 
Some real winners could therefore, come from the textile sector, as the price of the cotton has dropped, helping the companies who are into the finished products business. The textile exporters is already major beneficiaries of the depreciating rupee and now with the situation in both the US and Europe improving fast, these companies are expected to see a pick up of the orders again. Earlier the exports to the US and Europe had taken a beating as retail sales there have dropped 70%. Now, in a circumstance when the value of exports have increased, if the volumes starts to pick up, then it would be great news for the Indian Textile sector. 
Buy SEL Manufacturing Ltd (Rs.10.13), Alok Industries Ltd (Rs.17.55), Rajesh Exports Ltd (Rs.135.80), Vardhaman Textiles Ltd (Rs.163.45), etc.

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