India-Pakistan conflict: Rupee opens marginally down at 84.66 per dollar in the wake of Operation Sindoor

India-Pakistan conflict: The rupee weakened by 31 paise to reach 84.66 against the US dollar in early trading on Wednesday, following India’s missile strikes on terrorist camps in Pakistan and Pakistan-Occupied Kashmir, which heightened cross-border tensions.

Early Wednesday, the Indian military launched strikes on nine terrorist targets, including the Jaish-e-Mohammad headquarters in Bahawalpur and the Lashkar-e-Taiba base in Muridke, as part of Operation Sindoor. These strikes came two weeks after the Pahalgam attack that claimed 26 civilian lives.

Where's Indian Rupee headed?

According to forex traders, the rupee’s decline reflects concerns over a potential escalation in conflict due to the military action. At the interbank foreign exchange market, the rupee opened at 84.65 and slipped to 84.66 against the US dollar, marking a 31 paise drop from its previous closing value.

On Tuesday, the rupee ended the day 5 paise weaker at 84.35 against the US dollar, as uncertainty increased and investors became more cautious in adjusting their risk exposure.

“With geopolitical concerns and the US Fed policy meeting ahead, volatility in the currency is likely to remain elevated. The rupee is expected to move in a range of 84.00 to 84.75 in the coming sessions,” said Jateen Trivedi, VP Research Analyst - Commodity and Currency, LKP Securities.

Other than the onging India-Pakistan conflict, central bank interventions and a soft Chinese yuan are also contributing factor behind the Rupee movement.

“Fueled by geopolitical tensions and weakening domestic equities, the dollar inched up against the rupee. Adding to the rupee's woes were central bank interventions and a soft Chinese yuan. Consequently, the USDINR spot rate is projected to consolidate between 84.25 and 84.90 in the near term,” said Dilip Parmar, Senior Research Analyst, HDFC Securities.

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