The Indian central bank’s intervention on Wednesday to calm down money markets proved short-lived in containing the fall of the rupee and its fallout on the stock and bond markets.

The rupee slipped to a fresh record low 73.76 per US dollar in early trade on Thursday, after settling at a record low of 73.34 on Wednesday. The Reserve Bank of India (RBI) had on Wednesday allowed oil-marketing companies to raise dollars directly from overseas markets without a need for hedging. However, this only brought a temporary reprieve.

The 30-share Bombay Stock Exchange Sensex fell sharply, with investors worried that the fall in the rupee and increase in crude-oil prices would further widen the trade deficit.

At 11:50am on Thursday the Sensex fell 761.86 points or 2.12% to 35,214.44 points. About three shares declined for every share rising on the BSE. Shares of Reliance Industries dipped 5.4% to 1,140 rupees per share on the BSE in intra-day trade, recording their sharpest intra-day fall during calendar year 2018.

Other heavyweights such as HDFC Bank, TCS, Infosys, HDFC, ITC, Bajaj Finance, HUL, ICICI Bank, Bajaj Finserv and IndusInd Bank were down 1-4%, while L&T, Bharti Infratel and Yes Bank gained more than 1%.

At 12 noon the 50-share NSE Nifty slipped 261.50 points or 2.41% to 10,658 points.

In the bond markets, the yield on the benchmark 10-year bond jumped to 8.20% – the highest in three weeks.

Against this backdrop, the RBI’s Monetary Policy Committee will announce its latest policy decision on Friday and an interest-rate increase is likely.