The Indian has rupee slipped to a fresh record low against the US dollar on Wednesday, weighed down by elevated crude oil prices and a spike in global bond yields amid concerns over stalled US-Iran peace talks.

The local currency opened 33 paise lower at 96.86 per dollar, down from its previous close of 96.53. The rupee has eclipsed its all-time low of 96.6150 hit in the previous session. The currency is down 6% since the Iran war began in late February.

The domestic currency thereafter weakened further to 96.96 against the US Dollar  as elevated crude oil prices are raising concerns about a fresh global inflation surge. This has, in turn, pushed global bond yields to multi-year highs, hurting risk appetite across equity markets.

Persistently high energy prices, coupled with weak foreign capital flows and rising global yields, have strained India’s external position, raising concerns over a widening balance of payments deficit in the current financial year.

Meanwhile, the Indian stock market opened lower amid persistent concerns over high crude oil prices and sustained foreign fund outflows.

The Sensex lost 394.36 points, or 0.52%, to 74,806.49, while the NIFTY 50 declined 160.75 points, or 0.68%, to open at 23,457.25.

Foreign Institutional Investors (FIIs) remained net sellers in the cash market, offloading equities worth ₹2,457.49 crore. In contrast, Domestic Institutional Investors (DIIs) continued to provide strong support to the market, purchasing equities worth ₹3,801.68 crore.

Dollar strength pressures the rupee

The dollar index climbed to near 99.4 as rising oil prices and inflation concerns pushed expectations of prolonged high US interest rates.

Bond yields surge

The US 10-year yield rose above 4.5%, while the 30-year yield crossed 5.1%, strengthening the dollar and hurting emerging-market currencies like the rupee, according to experts.

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