Yields of G-Secs jumped due to the possibility that rising crude oil prices could stoke inflation.
| Photo Credit:
anoopkrishnan
The rupee breached the 94 per dollar mark on Monday as the West Asia war continued to rage, leading to hardening of crude oil prices and FPIs persisting with selling in the domestic equity markets.
Yields of Government Securities (G-Secs) jumped due to the possibility that rising crude oil prices could stoke inflation.
The rupee closed at a new all-time low of 93.98 per dollar, down 27 paise over the previous close of 93.71. Intraday, it touched a low of 94.01 per dollar.
Siddhartha Khemka, Head of Research, Wealth Management, Motilal Oswal Financial Services Ltd, noted that currency markets reflected the stress arising from the escalating tensions between the US and Iran, with the rupee depreciating to a record low against the dollar, pressured by elevated crude prices and persistent foreign outflows.
FPIs remained net sellers, with cumulative outflows of ₹90,152 crore in March so far, adding to market pressure.
SBI, in a report, said “Since the start of the West Asia war, the rupee has depreciated by 2.74 per cent in just 21 days! Presently, one year NDF (non-deliverable forward) is trading at ₹96.43 while most volatility remains concentrated in near term NDFs.”
SBI economists said, going forward, if the war stretches beyond 10 days, the rupee is likely to face depreciation headwinds further (considering no significant intervention by the RBI).
They assessed that if the war continues for another month, the rupee might cross ₹96/$; if the war stops in another 7-10 days, the rupee is likely to be largely trading in the range of ₹91.5-94.5/$
Meanwhile, the 10-year benchmark government bond (6.48 per cent GS 2035) opened 5 basis points (bps) higher at 6.78 per cent due to an escalation in the West Asia war over the weekend and the subsequent rise in crude oil prices and US Treasury yields, according to a Nuvama Wealth report.
Over the day, yield of the aforementioned paper rose to 6.89 per cent as stop losses triggered and Brent crude for May delivery hovered above $112/barrel.
The 10-year G-Sec reversed and yields fell after US Trump said the US and Iran have held productive talks over a resolution to hostilities in the Middle East, Nuvama said The 10Y yield closed 11 bps higher at 6.84 per cent vs 6.73 per cent.
Published on March 23, 2026
