The Indian rupee fell to a record low on Wednesday as the continuing deadlock in US-Iran peace negotiations kept crude oil prices elevated, intensifying fears of a fresh global inflation surge.
The rupee weakened to 96.8650 against the dollar during early trade, breaching its previous all-time low of 96.6150 touched in the previous session. Since the Iran conflict escalated in late February, the Indian currency has declined around 6 percent.
Persistently high oil prices, weak foreign capital inflows and rising global bond yields have increased concerns over India’s balance of payments position in the current financial year.
The broader global market mood also remained fragile as surging inflation fears pushed bond yields to multi-year highs, hurting equity markets worldwide.
Brent crude prices have jumped more than 50 percent since the conflict began, while overseas investors have pulled out more than $22 billion from Indian equity and debt markets during the same period.
Higher crude prices are particularly worrying for India, one of the world’s largest oil importers, as they could widen the trade deficit, pressure the rupee further and complicate the inflation outlook for the Reserve Bank of India.