Mumbai: On Wednesday, the Indian rupee depreciated by 45 paise, closing at 84.80 against the US dollar. The decline was attributed to heightened tensions between India and Pakistan, following India’s military action in Pakistan and Pakistan-Occupied Kashmir. The Indian Army carried out missile strikes under Operation Sindoor, targeting nine terror camps, including those of Jaish-e-Mohammad in Bahawalpur and Lashkar-e-Taiba in Muridke. This operation came two weeks after the Pahalgam attack that killed 26 civilians, further escalating the situation.
Forex Market Reaction
The rupee’s fall came in the wake of the military strikes, with traders noting that the growing geopolitical tensions negatively impacted investor sentiment. At the interbank foreign exchange, the rupee opened at 84.65 and fluctuated between a high of 84.47 and a low of 84.93. It eventually closed at 84.80, down by 45 paise from the previous session’s closing level.
Market Outlook: Weak Dollar and Positive Global Trends
Despite the geopolitical tensions, experts predict that the rupee might trade with a positive bias in the coming days, driven by a weak US dollar and favorable global market conditions. Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan, mentioned that Foreign Institutional Investors (FIIs) inflows could also support the rupee. However, geopolitical uncertainties and rising crude oil prices are likely to limit the rupee’s upside potential. The USD-INR spot price is expected to trade within the range of 84.40 to 85.10.
Impact of Global Factors
The dollar index, which measures the greenback's strength against a basket of six currencies, was trading higher by 0.23% at 99.46. Additionally, Brent crude oil prices rose by 0.42%, reaching USD 62.41 per barrel, which may add further pressure on the domestic currency.
Stock Market Shows Volatility but Ends Positive
On the domestic stock market front, heavy volatility followed India’s missile strikes, but the market ended on a positive note. The BSE Sensex closed up by 105.71 points (0.13%) at 80,746.78, while the Nifty gained 34.80 points (0.14%) to settle at 24,414.40.
