The Indian rupee recorded a historic low on Monday, declining for the seventh consecutive trading session, impacted by rising global bond yields and elevated energy prices, further straining Asia’s poorest-performing currency this year.
The rupee fell to 96.3875 per dollar, surpassing its previous all-time low of 96.1350, and concluded the session at 96.3450, representing a 0.4% decrease from its closing level on Friday. Over the last seven trading days, the currency has depreciated by 2%. Market participants noted that without the Reserve Bank of India’s interventions, the losses would have been more significant.
Persistently high energy prices and weak capital inflows have resulted in India facing a third consecutive fiscal year of a deficit in its balance of payments (BoP). Economists from HSBC have projected a BoP deficit of approximately $65 billion for the fiscal year concluding in April 2027.
In a Monday note, analysts observed that “the ongoing distribution of exchange market pressures between currency weakness and the depletion of foreign exchange reserves is likely to continue.” They pointed out that a weaker currency could potentially help in reducing the trade deficit by enhancing export competitiveness while discouraging imports due to increased costs.
Since March, overseas investors have offloaded more than $23 billion in local stocks and bonds, aggravating the capital account situation amid a current account burdened with high import prices.
GLOBAL SELLOFF
The surge in energy prices attributed to the Iran conflict has heightened inflation fears and fueled expectations for interest rate hikes from global central banks, resulting in a decline in bond values from Tokyo to New York.
Yields on U.S. 10-year notes reached a 15-month high of 4.631%, while Japan’s 10-year yield reached its highest level since 1996, with Indian yields rising by 6 basis points. Efforts to resolve the Iran conflict appear to have stalled following a drone strike on a nuclear facility in the United Arab Emirates.
Brent crude futures have stabilized around $110 per barrel. Analysts at ING stated, “Rising oil prices coupled with a selloff in the long end of the bond market pose a bearish double burden for emerging market currencies and risk assets broadly.”
Published on May 18, 2026
