India's rupee plunged the most since 1996, to a record low, on concern the nation's current-account deficit will worsen as oil prices climb amid political tensions in the Middle East. Bonds and stocks fell.

The U.S. said yesterday President Barack Obama will hold Syria accountable for using chemical weapons against its people, fanning concern that unrest in the region will disrupt fuel supplies. Brent crude rose 4 percent in August, boosting costs for Asia's No. 3 economy that buys almost 80 percent of its oil abroad. India is also the world's top buyer of gold, the price of which gained 15 percent this quarter. Costlier imports are adding pressure on India's balance of payments at a time when the prospect of a cut in U.S. stimulus is fueling fund outflows.

"The rupee is likely to continue to be under pressure, given rising gold and oil prices," Dariusz Kowalczyk, a senior economist at Credit Agricole CIB in Hong Kong, said in an e-mail interview. "Any major dip in the dollar-rupee exchange rate should be seen as a buying opportunity for the pair given lack of sufficient measures that would turn around India's weak fundamentals."