Operation Sindoor impact: The rupee fell sharply by 42 paise to settle at 84.77 against the US dollar on Wednesday, hit by mounting cross-border tensions following India’s military strikes on terror camps in Pakistan and Pakistan-Occupied Kashmir.
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Indian armed forces carried out missile strikes early Wednesday targeting nine terrorist locations, including Jaish-e-Mohammad’s base in Bahawalpur and Lashkar-e-Taiba’s facility in Muridke, under "Operation Sindoor." The operation came two weeks after a deadly terror attack in Pahalgam that claimed 26 civilian lives.
Forex dealers said the geopolitical flare-up exerted strong pressure on the rupee, which had already shown signs of weakness in the previous session.
At the interbank foreign exchange market, the rupee opened at 84.65 and saw an intra-day high of 84.47 and a low of 84.93 before settling at 84.77 per dollar — its largest single-session drop in a month.
On Tuesday, the rupee had closed 5 paise lower at 84.35 per dollar amid prevailing uncertainty and a cautious tone among investors.
“We expect the rupee to trade with a positive bias on the weak dollar and positive domestic and global markets. FII inflows may also support the rupee. However, simmering geopolitical tensions between India and Pakistan and a positive crude oil prices may cap sharp upside,”Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan told news agency PTI.
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Choudhary added, “Traders may remain cautious ahead of the US FOMC meeting outcome. The US Federal Reserve is expected to keep interest rates unchanged. USD-INR spot price is expected to trade in a range of 84.40 to 85.10.”
Meanwhile, the dollar index — which measures the US currency against a basket of six global currencies — was up 0.23 per cent at 99.46.
Dilip Parmar, Senior Research Analyst at HDFC Securities, said the rupee’s fall marked its steepest one-day loss in a month due to heightened geopolitical uncertainty and a stronger dollar.
“Furthermore, consistent dollar demand from oil importers and hedgers have exerted downward pressure on the rupee over the past two days. Spot USD-INR is anticipated to trend upward, potentially reaching 85.70 if it holds above 85. Conversely, 84.25 presents a significant support level,” Parmar said.
Brent crude oil prices rose 0.42 per cent to USD 62.41 per barrel in futures trade, adding to the rupee’s weakness.
Despite the turmoil, the domestic equity markets managed to close higher after witnessing intense intraday volatility triggered by the military strikes.
The 30-share BSE Sensex gained 105.71 points, or 0.13 per cent, to end at 80,746.78, while the Nifty 50 rose 34.80 points, or 0.14 per cent, to settle at 24,414.40.
Foreign institutional investors (FIIs) were net buyers, purchasing equities worth Rs 2,585.86 crore on Wednesday, according to exchange data.
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