The rupee slumped below the psychologically important 96 per dollar mark on Thursday (October 1, 2026) to close at 96.31 (provisional) against the U.S. dollar, the lowest level in more than two months, on risk aversion in global markets amid surging global bond yields and selling pressure from foreign investors.

Forex traders said the rupee is expected to trade with a negative bias amid risk aversion in global markets and worries over rising global treasury yields.

At the interbank foreign exchange market, the rupee opened at 95.95, then lost ground to touch an intraday low of 96.34 against the American currency. At the end of Thursday’s trading session, the domestic unit was quoted at 96.31 (provisional) against the greenback, lower by 37 paise over its previous close.

On Wednesday, the rupee pared gains to settle flat at 95.94 against the U.S. dollar.

“We expect the rupee to trade with a negative bias on risk aversion in global markets and worries over rising global treasury yields. A strong dollar and surge in global crude oil prices may further pressurise the rupee,” said Anuj Choudhary, Research Analyst, Mirae Asset Sharekhan.

Mr. Choudhary further noted that uncertainty over U.S.-Iran deal may also pressurise the rupee. However, any intervention by the RBI may support the rupee at lower levels.

Meanwhile, the dollar index, which gauges the strength of the greenback against a basket of six currencies, was trading at 101.90, higher by 0.45%.

Brent crude, the global oil benchmark, was trading higher by 2.54% at $100.52 per barrel in futures trade.

On the domestic equity market front, Sensex dropped 570.59 points to settle at 71,909.70, while the Nifty tanked 198.50 points to 22,421.95.

Foreign Institutional Investors (FIIs) offloaded equities worth ₹10,148.41 crore on a net basis on Wednesday, according to exchange data.

On the domestic macroeconomic front, India’s manufacturing sector activity growth touched a seven-month high in September, boosted by accelerating new orders and output.

The seasonally-adjusted HSBC India Manufacturing Purchasing Managers’ Index (PMI) rose by more than two index points in September, to 55.1 from 52.8 in August, signalling the strongest improvement in the health of the sector for seven months.