Mumbai: The Indian rupee weakened further to drop past the 64-mark and bond yields surged to levels last seen in September 2001 on Tuesday, with panic spreading in the financial markets and no positive cues seen to support the battered currency. The rupee opened the session at 63.71 per dollar, down 0.91%, and soon tested its fresh lifetime low of 64.12. This is the fifth consecutive session in which the rupee has nosedived. It had closed at 63.13 per dollar on Monday. The 10-year bond yield rose to 9.49%—a level last seen in September 2001—from its previous close of 9.24%. “The bond yields are tracking the rupee slide. But what we are witnessing now is purely a knee-jerk reaction,� said N.S. Venkatesh, treasurer at IDBI Bank Ltd. Dealers said measures taken by the Reserve Bank of India (RBI) so far to shore up the rupee hasn’t yielded the desired impact to arrest the currency’s fall. The apex bank began taking steps to drain excess liquidity in the banking system and curb forex outflows in mid-July. RBI first capped the amount banks can borrow from its liquidity window and raised the daily balance requirement for banks on maintaining the cash reserve ratio, or the portion of deposits the banks need to park with the apex bank. But with the measures, mainly aimed at currency speculators, not showing expected results, RBI partially rolled back the currency’s convertibility and imposed some capital controls on resident Indians and limited the ability of Indian firms to invest abroad. On Tuesday, UBS AG said a drop in the currency to 70 per dollar is possible, while Credit Suisse Group AG saw a decline to 65, as slow growth and a record current-account deficit leave Asia’s third largest economy vulnerable to a pullout of funds with the US preparing to pare stimulus. At 9.36am, the Indian currency was trading at 63.96 per dollar, down 1.32%, while India’s equity benchmark Sensex was trading at 18,071.42 points, down 1.29% from its previous close.

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