--- title: "Rupee hits fresh low, bond yields jump as crude oil prices surge" type: "News" locale: "en" url: "https://longbridge.com/en/news/286793701.md" description: "The Indian rupee fell to a new low of 96.40 per dollar, influenced by rising crude oil prices and US Treasury yields. The benchmark 10-year government bond yield increased to 7.13%. Analysts expect continued pressure on the rupee, with potential rate hikes by the RBI anticipated. India's balance of payments deficit could widen significantly, necessitating additional foreign exchange reserves. Brent crude prices are fluctuating above $110 per barrel." datetime: "2026-05-18T07:28:26.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/286793701.md) - [en](https://longbridge.com/en/news/286793701.md) - [zh-HK](https://longbridge.com/zh-HK/news/286793701.md) --- # Rupee hits fresh low, bond yields jump as crude oil prices surge The rupee fell to a fresh intra-day low of 96.40 per dollar on Monday, while the yield on the benchmark 10-year government bond surged by 7 basis points to 7.13 per cent, tracking a sharp rise in US Treasury yields and elevated crude oil prices amid persistent geopolitical tensions, dealers said. The local currency settled at a new closing low of 96.36 per dollar against the previous close of 95.97 per dollar. “The rupee is under pressure due to rise in crude prices and the rise in UST,” said a dealer at a state-owned bank. “The RBI stepped in to contain volatility. The pressure is expected to remain, with the rupee now expected to trade above 96 per dollar during the week,” he added. “As India largely depends on imported crude for its oil needs, along with the recent impact of gold imports, this has led to a rapid widening of the country's trade deficit, which is the prime reason for such a drastic depreciation in INR,” said Prashant Pimple, chief investment officer - fixed income, Baroda BNP Paribas Mutual Fund. The yield on the benchmark 10-year government bond inched up to 7.14 per cent during the day. “All the global yields are going up, even US Treasuries. Crude oil has also jumped above $110 and continues to trade above that level, so there is fear of a further increase in inflation in the coming months,” a dealer at a primary dealership said. Traders said a section of the market has started pricing in the possibility of a rate hike by the RBI’s Monetary Policy Committee earlier than previously anticipated, although economists largely continue to expect action from the domestic rate-setting panel only from the August policy review. The six-member Monetary Policy Committee will next meet from June 3-5 to review the policy. Overnight indexed swap (OIS) rates are already discounting the possibility of a rate hike in the next policy itself, market participants said. Dealers, however, expect the Monetary Policy Committee to maintain a cautious stance and flag risks emerging from the ongoing war and elevated commodity prices. In a recent panel discussion organised by the Swiss National Bank (SNB) and the International Monetary Fund (IMF) last week, RBI Governor Sanjay Malhotra said the MPC has the space to tolerate the supply shock, assuming it is temporary, while emphasising keeping a close watch on whether and when the supply shock can become embedded in the general price level that may warrant monetary policy action. “A section of the market is expecting a rate hike sooner,” said a market participant. “It is still largely a supply-side issue. Even if rates are raised, unless crude prices cool off meaningfully, there may not be immediate relief,” he added. HSBC, in a report, said that India’s balance of payments (BoP) deficit could widen to around $65 billion in FY27 from about $35 billion in FY26, assuming oil prices average $95 per barrel. It further said that India may require roughly $30 billion of additional foreign exchange reserves through stronger capital inflows or current account savings to maintain adequate external buffers. “If the forecast $65 billion balance of payments deficit materialises in FY27, India could dip below the 10th percentile threshold on reserve adequacy metrics,” the report said. Brent crude oil prices were trading above $110 per barrel against the previous day’s $109.26 per barrel. 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