---
title: "Rising US yields on Fed rate hike bets pile pressure on sliding rupee"
type: "News"
locale: "en"
url: "https://longbridge.com/en/news/286997610.md"
description: "The Indian rupee is under pressure, potentially hitting an all-time low due to rising U.S. Treasury yields linked to expectations of a Federal Reserve rate hike. The rupee has declined 0.6% this week and is on a seven-session losing streak. High oil prices and a selloff in U.S. bonds are exacerbating the situation, with markets now pricing in a near 50% chance of a Fed rate hike in 2026, a significant change from previous expectations."
datetime: "2026-05-20T03:05:54.000Z"
locales:
  - [zh-CN](https://longbridge.com/zh-CN/news/286997610.md)
  - [en](https://longbridge.com/en/news/286997610.md)
  - [zh-HK](https://longbridge.com/zh-HK/news/286997610.md)
---

# Rising US yields on Fed rate hike bets pile pressure on sliding rupee

By Nimesh Vora

MUMBAI, May 20 (Reuters) - The Indian rupee may hit an all-time low on Wednesday, as a surge in U.S. Treasury yields ‌on rising expectations of a Federal Reserve rate hike this year ‌compounds pressure on the already fragile currency.

The rupee is expected to open in the 96.75-96.80 range, ​per traders, having settled at 96.5325 on Tuesday.

The currency is on a seven-session losing streak, logging fresh lows against the U.S. dollar in six of those days. It has already shed 0.6% this week, extending a 1.6% decline from ‌last week.

A surge in U.S. ⁠Treasury yields amid a broad selloff in developed market bonds is amplifying pressure on the rupee, which is already under ⁠strain from oil prices that are distorting daily dollar demand and weighing on capital flows.

The 10-year U.S. yield has jumped over 20 basis points in four ​days, while ​the 30-year yield has hit its highest ​since 2007. Shorter maturities have ‌followed suit, with the jump driven by war-linked inflation concerns pushing up expectations of Fed rate hikes this year.

A selloff across U.S. bond markets has accelerated over the past week on stalled U.S.-Iran talks fuelling worries that oil prices will remain high for longer than anticipated.

Brent crude held near $111 per barrel ‌on Wednesday, with U.S. President Donald Trump's ​comments that the Iran conflict will be resolved "very ​quickly" having little impact.With crude ​holding well above the $100 mark, markets are pricing in a ‌near 50% probability of a Fed ​rate hike in ​2026, a stark shift from a month ago when investors saw little to no chance of policy tightening.

"The rupee, having largely adjusted to the ​prospect of persistently high ‌oil prices, now faces a repricing due to the sizeable shift ​in U.S. rates," a currency trader at a bank said.

(Reporting by ​Nimesh Vora; Editing by Sonia Cheema)

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