The Indian rupee on Wednesday opened marginally higher and was trading at 71.46 a dollar, up 0.14 percent, from its Tuesday’s close of 71.57.

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Abhishek Upadhyay, senior economist at ICICI Securities Primary Dealership (I-Sec PD), spoke to CNBC-TV18 about the current slide in rupee and bond prices.

“Over the last month there has been a marked shift in market pricing of the RBI rate hikes. Now both an October and December rate hikes are fully priced in,” Upadhyay said, adding that this does not mean that there would not be a further sell-off because in the near-term, yields should remain a function of rupee and crude prices.

"If crude prices were to further go higher, there would be an asymmetric impact of that on both, in terms of the RBI rate hike expectations and also on fiscal parameters," said Upadhyay.

The 10-year bond yield stood at 8.045 percent, from its previous close of 8.063 percent. Bond yields and prices move in opposite directions.

"The house had expected 8 percent levels at end of August policy review on bond yields but they are already above it at around 8.05 percent. So one would expect some consolidation after smart sell off but we need stability in INR and decline in crude prices to get some calm," said Upadhyay.

“So, as long as those variable don’t improve, I would not preclude further pick up in yields yet,” he said.

According to Upadhyay, the rupee should continue to outperform other emerging market currencies because this is not 2013 when rupee was singled out.

"Even the developed market currencies have weakened over the last two months, which was not the case in 2013. Moreover, India is doing much better in terms of macros as compared to developed markets but crude prices will play an important role form hereon", said Upadhyay.