The Indian rupee breached the 96-per-dollar mark on October 1, touching 96.3150 in intraday trade before closing at 96.31, down 37 paise, its lowest level in two months.

The fall of about 0.5 per cent was driven by a cocktail of global pressures. The 10-year US Treasury yield climbed to around 5.34 per cent, its highest since 2002, making dollar assets more attractive. Foreign investors sold Indian equities worth Rs 10,148.41 crore on Wednesday alone.

Brent crude stayed above $100 a barrel, raising India’s dollar demand since the country imports most of its oil. State-run banks were seen intervening to slow the slide, a pattern of recent weeks.

A weaker rupee makes imports costlier and can feed inflation, though it helps exporters. The Reserve Bank of India has been smoothing volatility rather than defending any level, and analysts expect the currency to stay under pressure while US yields remain high.