(Bloomberg) — The Indian rupee declined to a new record low and stocks slid as global risk-off sentiment spurred by expectations of aggressive Federal Reserve tightening weighed on emerging-market assets and stoked fears of more equity outflows.

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The local currency slid as much as 0.6% to 78.2825 per dollar on Monday, after having hit a series of lows in recent days. The benchmark S&P BSE Sensex Index slid about 2.8% as foreigners withdrew about $24 billion from local stocks this year. Bonds also declined.

A widening current-account deficit stoked by rising oil and commodity prices threatens to weigh on the nation’s external finances, along with widening equity outflows. Still, the central bank has nearly $600 billion of foreign-exchange reserves, which it has been deploying to curb any sharp volatility in the currency.

“It’s natural for emerging-market currencies to weaken during risk off,” said Churchil Bhatt, executive vice president at Kotak Mahindra Life Insurance Co. “While the Reserve Bank of India has sufficient reserves to manage any undue volatility, the rupee may be expected to move in line with its Asian peers. We expect the rupee to exhibit a near-term bias for orderly depreciation towards 80 levels.”

Sovereign bonds also declined, with the yield on the benchmark 10-year bond rising by as much as nine basis points to 7.61%, while that on the four-year bond surged by 13 points. Traders will look forward to the release of inflation data later on Monday.

“Today’s move in Indian bonds is more to do with Fed rate-hike expectations, but if India inflation is higher, you could see a much worse impact tomorrow,” said Madhavi Arora, lead economist at Emkay Global Financial Services. CPI inflation above 7.10% would have the market very worried, she said.

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