The rupee declined 0.4% to 49.0225 per dollar on Thursday. The currency dropped as low as 49.25 earlier. The yield on the 8.24% note due April 2018 fell three basis points to 5.55 %.
India?s rupee weakened as global stock losses reignited concerns foreign funds will shun risk and dump their local holdings amid a deepening economic slump.
?The rupee is under pressure to weaken because global stock markets are showing a negative trend,? said Amit Garg, a trader at state-owned Allahabad Bank in Mumbai. ?Local stocks too are expected to decline,? raising the odds of capital outflows.
Implied volatility on one-month dollar-rupee options fell on Thursday to 16%, the lowest since September, Bloomberg data show. Traders quote implied volatility, a gauge of expected swings in exchange rates, as part of option prices.
India?s benchmark bonds advanced for a fourth day, the best run in almost a month, as a government report showed the inflation rate fell to an 11-month low. Yields on notes due in 2018 slid to the lowest in more than a week as traders increased bets slowing price gains will prompt the central bank to cut borrowing costs.