--- title: "Rupee hits all-time low on mounting external finance pressures, rising US yields" type: "News" locale: "en" url: "https://longbridge.com/en/news/286877311.md" description: "The Indian rupee has fallen to a record low of 96.44 per U.S. dollar due to rising oil prices and increasing U.S. Treasury yields, exacerbated by the ongoing Iran conflict. Economists predict a significant widening of India's current account deficit, estimated between $65 to $70 billion this year. High crude prices are impacting India's external balances and inflation, with April's merchandise trade deficit reaching $28.38 billion. The situation is further complicated by rising U.S. yields, making it harder for India to attract necessary capital inflows." datetime: "2026-05-19T07:55:07.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/286877311.md) - [en](https://longbridge.com/en/news/286877311.md) - [zh-HK](https://longbridge.com/zh-HK/news/286877311.md) --- # Rupee hits all-time low on mounting external finance pressures, rising US yields By Nimesh Vora MUMBAI, May 19 (Reuters) - The Indian rupee fell to a lifetime low on Tuesday, weighed by intensifying external pressures, with the protracted Iran conflict driving a ‌sustained surge in oil prices and pushing U.S. Treasury yields higher. The rupee dropped to ‌96.44 per U.S. dollar, slipping past the prior lifetime low of 96.3875 hit on Monday. The currency's losses since ​the Iran war broke out in late February now total 6%. The combination of high crude prices, underpinned by the prolonged U.S.-Iran impasse, and subdued capital inflows is widening India's external imbalances and leaving the rupee vulnerable. Economists expect India's current account deficit to widen significantly in the current fiscal year. A ‌potential hit to remittances from the ⁠Middle East and expectations of subdued portfolio flows on rising concerns over India's growth outlook could add to external sector pressures. India's balance of payments is ⁠set to widen to a deficit in the range of $65 to $70 billion this year, economists estimate, marking a third straight year of deficits and underscoring persistent external sector pressures. India "faces a two-fold challenge...to lower the ​current ​account deficit and attract capital inflows that are sustainable," ​HSBC said in a note. "The continued ‌distribution of FX market pressure between currency weakness (which can lower the trade deficit over time) and FX reserve use should help." High oil prices are already feeding through to India's external and inflation dynamics. The merchandise trade deficit widened to $28.38 billion in April, driven largely by a surge in crude oil imports to a six-month high. At the same time, April wholesale inflation accelerated to its ‌highest level in three-and-a-half years, underscoring the pass-through of ​higher energy costs. Prime Minister Narendra Modi's recent calls to conserve ​fuel and foreign exchange highlight the ​scale of pressure on the economy. U.S. YIELDS ADD TO PRESSURE The recent surge in ‌U.S. Treasury yields, driven by inflation concerns, ​is further complicating the ​outlook for the rupee. The U.S. 10-year yield climbed to its highest level in a year, before easing on Tuesday, with investors increasingly pricing in the possibility of a ​Federal Reserve rate hike this ‌year. This is likely to make it more challenging for India to attract the capital ​inflows needed to finance its current account deficit, according to analysts. (Reporting by Nimesh ​Vora; Editing by Mrigank Dhaniwala and Janane Venkatraman) ### Related Stocks - [OXY.US](https://longbridge.com/en/quote/OXY.US.md) - [USO.US](https://longbridge.com/en/quote/USO.US.md) - [VDE.US](https://longbridge.com/en/quote/VDE.US.md) - [OIH.US](https://longbridge.com/en/quote/OIH.US.md) - [XES.US](https://longbridge.com/en/quote/XES.US.md) - [IEZ.US](https://longbridge.com/en/quote/IEZ.US.md) - [IXC.US](https://longbridge.com/en/quote/IXC.US.md) - [XOP.US](https://longbridge.com/en/quote/XOP.US.md) - [EPI.US](https://longbridge.com/en/quote/EPI.US.md) - [IEO.US](https://longbridge.com/en/quote/IEO.US.md) - [BNO.US](https://longbridge.com/en/quote/BNO.US.md) - [CRAK.US](https://longbridge.com/en/quote/CRAK.US.md) - [UUP.US](https://longbridge.com/en/quote/UUP.US.md) - [INDA.US](https://longbridge.com/en/quote/INDA.US.md) - [UCO.US](https://longbridge.com/en/quote/UCO.US.md) - [USDU.US](https://longbridge.com/en/quote/USDU.US.md) - [00005.HK](https://longbridge.com/en/quote/00005.HK.md) - [HSBC.US](https://longbridge.com/en/quote/HSBC.US.md) - [HSBA.UK](https://longbridge.com/en/quote/HSBA.UK.md) - [DTIW.SG](https://longbridge.com/en/quote/DTIW.SG.md) ## Related News & Research - [ANALYSIS-Bond yield spike is risk to unprepared equities market, investors warn](https://longbridge.com/en/news/286668628.md) - [IEA chief Birol: commercial oil inventories depleting rapidly, only weeks left](https://longbridge.com/en/news/286746172.md) - [Oil rises more than 1% after drone attack on UAE nuclear power plant](https://longbridge.com/en/news/286683769.md) - [Record oil draw from US emergency reserve drives total volumes to two-year low](https://longbridge.com/en/news/286821970.md) - [Iraq exported 10 million barrels of oil in April through Strait of Hormuz](https://longbridge.com/en/news/286637828.md)