Operation Sindoor: Indian Rupee Declines As India-Pak Tensions Intensify Regional Uncertainty

The Indian rupee weakened against the U.S. dollar in the non-deliverable forward (NDF) market on Wednesday, following military action by the Indian Armed Forces against Pakistan .

The rupee settled at 84.35, down by 5 paise from the previous day. The market reacted cautiously to the geopolitical developments, with investors adjusting their risk appetite amid growing uncertainty.

Forex traders noted that despite a drop in crude oil prices and sustained foreign fund inflows, the geopolitical tensions between India and Pakistan weighed on investor sentiment.

The rupee saw fluctuations, opening at 84.28, reaching a high of 84.26, and a low of 84.63 during the session.

Operation Sindoor Ripple Effect

Earlier in the week, the rupee gained 27 paise to close at 84.30 against the dollar. The one-month NDF showed that the rupee is expected to trade between 84.64 and 84.68 when the onshore spot market opens.

The Indian Armed Forces launched “Operation Sindoor,” targeting nine sites in Pakistan and Pakistan-occupied Jammu and Kashmir, where terrorist activities against India were allegedly planned.

Also Read: Operation Sindoor: USA Closely Monitoring Situation

This operation follows the deadly Pahalgam terrorist attack, in which 25 Indians and one Nepali citizen were killed. India emphasised that the strikes were targeted, measured, and non-escalatory, ensuring no Pakistani military facilities were affected.

Dollar Index

Meanwhile, the dollar index, which measures the U.S. dollar’s strength, was slightly lower at 99.78. Brent crude prices rose by 2.86% to $61.95 per barrel.

In the stock market, the BSE Sensex fell by 0.19% to 80,641.07 points, while the Nifty dropped 0.33% to 24,379.60 points, on Wednesday. Despite the market decline, foreign institutional investors (FIIs) purchased equities worth Rs 3,794.52 crore.

On a positive note, India's service sector showed growth in April. The HSBC India Services PMI reached 58.7, slightly up from March's 58.5, indicating strong expansion in service sector output.