The local currency declined to the lowest in a week as rising crude oil prices increased costs for companies such as Indian Oil Corp. The commodity has climbed 76 % this year on signs the US economy, the worlds largest, is recovering from the worst slump since the Great Depression.
Dollar demand is increasing and there is not enough supply, said Vikas Babu, a currency trader at Andhra Bank in Mumbai.
Further pressure on the rupee is imminent in the near term. The local currency has strengthened 4.2 % this year, paring a loss for the decade to 6.8 %.
Indias 10-year bonds were little changed, with the yield near the highest level in more than three weeks, on speculation the central bank will raise interest rates to keep inflation under control.The yield on the most-traded 6.35% bond due January 2020 was at 7.62%.
The benchmark 10-year bond yield has climbed 2.36% in 2009, the biggest annual increase since at least 1999, when it ended that year at 11.22 %, according to data compiled by Bloomberg.
Indian bonds are the worst performers in 2009 among 10 Asian local-currency debt indexes compiled by HSBC Holdings Plc, slumping 5%, as the government stepped up sales of the securities to fund its economic stimulus. India plans to raise a record Rs 4.51 lakh crore ($96 billion) through debt sales in the fiscal year ending March 31.