Mumbai: The Indian rupee fell past the past $70-mark on Thursday to hit an over seven week low as a rising dollar and high crude prices weighed on sentiment

The rupee ended at 70.26 to a dollar — a level last seen on 6 March—and down 0.56% from its previous close of 69.87. The Indian unit had opened at 70.02 and touched a low of 70.29 a dollar during the day.

The 10-year bond yield closed at 7.45% compared with 7.425% at close on Wednesday.

Brent crude hit $75 a barrel, a first since October, supported by the US decision not to renew sanctions waivers on Iran and as Russian oil flows to parts of Europe were halted after customers complained of unusual impurities in the crude. Crude was up for the fifth consecutive session today, having gained 5.3% during the period. Year to date, prices have risen over 40%.

Analysts expect that any disruption to oil supply from Libya and Venezuela will put further pressure on India’s macroeconomic situation. A $10/bbl increase in oil prices impacts India’s current account by around $15 billion or 50 bps of GDP.

"Market seems to be suddenly worried about the deterioration in India’s macroeconomic conditions, especially with global crude prices reaching ‘danger’ levels from India’s current account deficit/balance of payment perspective", said Kotak Institutional Equities in a 24 April note. "We have been highlighting India’s structural and cyclical macroeconomic challenges, which the new government will have to overcome to accelerate India’s GDP growth."

Analysts believe that are less chances of the Reserve Bank of India (RBI) cutting rates in the next meeting due to higher crude oil prices amid concern over slower economic growth. Recently released RBI minutes suggest that the focus of the members of the Monetary Policy Committee has shifted from low food inflation to increased upside risks, particularly after a rise in crude oil prices and uncertainty about monsoon rainfall.

"We believe that the likelihood is now in favour of a cautious wait-and-watch June policy meeting, although we think it could be a close call. We are shifting the timing of the next 25 basis points rate cut to August (versus June) with a 45% probability that the cut gets delivered in June and 55% probability of an August cut. Exit food deflation, enter core", said Sonal Varma Chief India Economist, Nomura in an 18 April report.

Close