New Delhi: Hit by outflows from local equities, the Indian rupee, which has been on a downward spiral in recent months, further declined to its weakest level in more than two months on Tuesday (October 6), reported Reuters.The rupee closed on Tuesday at 96.42, a o.1% decline from its previous close.During early trade on Wednesday (October 7), after opening at 96.37 at the interbank foreign exchange market, the rupee once again fell by 22 paise to 96.57, reported Press Trust of India.Meanwhile, the Reserve Bank of India (RBI) on Wednesday also hiked the repo rate – the interest rate at which borrowers can secure short-term credit from RBI – for the first time since 2023.Market experts have said that the RBI’s rate hike reflects rising cyclical inflation risks.“The RBI’s October hike acknowledges that cyclical inflation risks are no longer benign. The change in stance also underscores the RBI MPC’s hawkish intent and is reinforced by upward revisions to growth and inflation forecasts,” said Radhika Rao, senior economist and executive director, DBS Bank.The rupee is Asia’s worst-performing currency and had been declining well before the US-Israel war on Iran, which has further led to its downfall.Experts have warned that the rupee could further weaken to 100 per US dollar or beyond if the ongoing crisis in West Asia persists.The Modi government often attributes the weakness of the rupee only to external pressures and factors such as the crisis in West Asia.The Wire had earlier reported that the decline of rupee against other Asian currencies such as Pakistan suggests that the issue is specific to India. If the decline were purely driven by global factors or the dollar, the impact would be more uniform across all regional currencies. Other emerging market currencies faced the same external shocks but did not weaken against Pakistan in the same way.