The rupee weakened past the 95 per dollar mark for the first time on March 30 to 95.2 per dollar, down 0.3%, as rising oil prices, ongoing geopolitical tensions, and a strong dollar environment continue to keep pressure on the currency. Rupee has depreciated 4.4% against USD dollar in the March quarter. Rupee ended at record closing low of 94.83 per US dollar as against Friday's close of 94.81 per USD.

The rupee, which opened on a strong note after the Reserve Bank brought down the net open position that banks can keep overnight at $100 million, erased the gains and fell 160 paise from its opening level.

Traders in the Indian foreign exchange market are bracing for a volatile week after the Reserve Bank of India tightened limits on lenders' net open forex positions, while surging oil prices are expected to keep government bonds under pressure, reported Reuters.

The rupee fell about 1% last week, its fourth consecutive weekly decline of a similar magnitude, to hit a record low of 94.84 against the dollar.

After market hours on Friday, the central bank said that banks must ensure that by April 10 their net open rupee positions in the onshore deliverable market do not exceed $100 million at the end of each business day.

Bankers have said that the short deadline could trigger disorderly unwinding of positions and potential losses on arbitrage positions.

India's 10-year benchmark bond yield extended its rise in afternoon trades to cross the 7% handle for the first time in over 21 months, as rupee plunged to another record low, while overnight index swap rates underwent another wave of paying.

The 10-year 2035 bond yield hit a high of 7.0121%, the highest for a 10-year paper since July 5, 2024, up from the previous session's close of 6.9419%.

Rupee is on course to log its steepest fiscal year drop since 2011-12, as the Middle East war has raised risks for India's inflation and growth outlook, adding to the strain from global trade frictions, geopolitical flare-ups and persistent capital outflows.

Worries over elevated oil prices have put the Indian stocks on course for their worst monthly drop since March 2020 and bonds on track for their worst fiscal year since 2023.

India's fiscal year runs April through March.

While the rupee had opened sharply higher, its gave up gains as corporates entered arbitrage trades between the onshore spot market and non-deliverable forwards. The space for such trades was opened up by the central bank's tightening of banks' forex positions on Friday.