The Reserve Bank of India (RBI) on Wednesday raised its repo rate from 5.25% to 5.5%, the first hike in nearly four years, and shifted its policy stance to "calibrated tightening." However, the move failed to prevent the Indian Rupee from approaching its historical low of 96.96 against the US Dollar, while benchmark bond yields rose to a nearly three-year high. Market performance suggests that this rate hike was insufficient to offset the continuous outflow of foreign capital, which has reached $30 billion this year, and imported inflationary pressures. Governor Sanjay Malhotra indicated the possibility of further rate hikes, but the market remains divided on the future path of tightening.