The rupee breached the 75 level to close 37 paise lower against the dollar at 75.36 on Monday on high crude prices. The higher price of dollar and oil triggered inflation fears pushing up yields on the 10-year government bond to a high of 6.34% the highest in 18 months.The rupee came under combined pressure as crude oil moved to a seven-year high and the dollar gained against major currencies in global markets on expectations that the US Federal Reserve will taper bond-buybacks to reduce liquidity. Bond yields rose because of fears of higher inflation coupled with RBI’s announcement that there may not be need for additional purchases under its government securities acquisition program.According to a bond dealer the rupee could come under further pressure unless the central bank decided to intervene and sell dollars. With forex reserves of $637 million and strong capital flows, there is no fear of market instability. Dealers however said that the combination of high fuel and forex would cause inflationary pressures to build up and increase pressure on the government to cut taxes on fuel.The rupee opened low in the interbank forex market at 75.11 and rose to a intra-day high of 75.06 and fell to a low of 75.39. The domestic unit finally closed at 75.36.“The movement in rupee is mainly driven by the uptrend in crude and dollar index. Some cooling off in crude prices and sell side RBI intervention may limit the trend but worries about US inflation are still alive and any upswing in inflation numbers this week, will boost expectations of an earlier FOMC rate hike next year after tapering, keeping the USDINR spot afloat,” said an analyst with Emkay Global Financial Services. “This week, we expect the spot to trade in between 74.75-75.50. There lies a strong support around 74.80-74.75, a break of which may push the spot towards 74.50. While, on upside a break of 75.50, may open doors for 75.75,” the analyst added.Professional forecasters surveyed by the Reserve Bank of India expect to be 5.7% in the fourth quarter lower than RBI’s own expectation of 5.8%. They also expect the yield on 10-year government bonds to inch up to 6.4% this year. According to the monetary policy report released by the central bank on Friday, the exchange rate is assumed at Rs 74.3 per US dollar in the baseline as against Rs 72.6 in the April monetary policy report.