MUMBAI - The Indian rupee dropped to a record low on Wednesday as a sharp rise in global crude oil prices heaped more pressure on the currency, prompting the central bank to quickly intervene to slow its fall.
The partially convertible rupee hit 73.4050 per dollar in early trade, an all-time low, and sharply lower than its previous close of 72.91. Indian markets were closed on Tuesday for a holiday.
At 0335 GMT, the rupee was trading at 73.30. The Reserve Bank of India stepped into the market to sell dollars, helping the rupee retrace to as much as 73.23 to the dollar.
The benchmark 10-year bond yield was up 7 basis points at 8.06 percent.
"The pace of fall in the rupee starts to accelerate as the depreciation matures," said Anindya Banerjee, deputy vice president, currency derivatives at Kotak Securities.
"The RBI is intervening more in the currency derivatives market through forwards and futures than in the spot market."
Indian stocks were also down dragged by financials and auto stocks such as ICICI Bank Ltd and Eicher Motors Ltd.
The broader Nifty was down 0.47 percent at 10,956.9 as of 0405 GMT, while the benchmark Sensex was 0.37 percent lower at 36,392.53.
Maruti Suzuki (India) was trading 2.2 percent lower. The carmaker had reported 0.5 percent decline in sales for September on Monday.
Among gainers, Yes Bank Ltd surged 9 percent and was the top percentage gainer on the NSE index.
Oil prices have firmed on expectations of tighter supply once U.S. sanctions start targeting Iran's petroleum industry from next month.
Though a strong dollar and rising U.S. crude supply are curbing gains, prices are hovering at the highest levels since November 2014.
In India, the world's third-largest oil importer, its currency plunge has meant oil prices have risen nearly 50 percent in rupee terms this year.
Other emerging currencies also weakened while the dollar index was at 95.334 after scaling 95.744 overnight, its highest since Sept. 4.
India's central bank is widely expected to raise its policy repo rate at a review on Friday in a bid to slow the rupee's decline and rein in inflationary pressures.