The rupee ended down 0.5% at 96.3150 per dollar, its sharpest single-day fall in more than ‌two months after it breached the key psychological barrier of 96 even as dollar sales by ‌state-run banks limited its fall. | Photo Credit: istock.com

The Indian rupee dropped to its weakest level in ​two months as global bond yields surged to decadal highs ‌and oil prices jumped, deepening pressure on the South ​Asian currency that was already hurt ⁠by foreign portfolio outflows on Thursday.

The rupee ended down 0.5% at 96.3150 per dollar, its sharpest single-day fall in more than ‌two months after it breached the key psychological barrier of 96 even as dollar sales by ‌state-run banks limited its fall.

Borrowing costs from the ‌US ⁠to France, Britain and Japan hit their highest ⁠in decades on Thursday, squeezing already pressured government finances, and threatening stocks, credit and other global assets.

The 10-year US Treasury yield, a ​yardstick for borrowing costs and ‌asset prices globally, rose to 5.34%, its highest since 2002.

Brent crude oil prices reclaimed the $100-per-barrel mark as well after China suspended oil products exports, potentially tightening fuel ‌markets already coping with supply shortages globally.

The multi-front ​pressures drove down stocks in Mumbai by about 1% while the yield on the 10-year ⁠benchmark bond rose to its highest level in over two years.

Supply disruptions, volatile energy prices and global uncertainty could ‌pose near-term risks to inflation, the rupee and capital flows, the Indian government said in a report on Thursday.

Prevailing pressures on the rupee have also kept exporters reticent about hedging their receivables even as importer hedging remains robust, exacerbating the demand-supply mismatch in the foreign exchange ‌market.

FX advisory firm IFA Global recommends that exporters should hedge cautiously ​and only to the extent of in-hand orders while importers are advised to hedge on any ⁠dips on the dollar-rupee pair.

Elsewhere, Asian currencies were down between ⁠0.1% and 0.4% while the dollar index rose 0.5% to nearly 102. Investors now await a ‌key US labour market report due on Friday, while Indian financial markets will be shut for a ​local holiday.

(Reporting by Jaspreet Kalra; Editing by Mrigank Dhaniwala, Nivedita Bhattacharjee and Janane Venkatraman)

Published on October 1, 2026