New Delhi: The recent India-Pakistan tensions have resulted in a significant depreciation of the Rupee’s value, with a significant depreciation of over 1 percent, the worst since February 6, 2023. A stronger US Dollar and higher crude prices have compounded the situation.
The Rupee started devaluing on May 7, when the Indian military launched Operation Sindoor to target Pakistani terrorist havens in Punjab and Pakistan-occupied Kashmir. Other Asian currencies also showed signs of weakness, the Chinese Yuan reduced in value by 7.22 percent, the Korean Won depreciated by 0.83 percent while the Indonesian Rupiah was down by 0.5% as against the dollar.
Considering the rising tensions between nuclear-armed India and Pakistan, risk-averse investors are flocking to buy the strengthening dollar even as crude prices keep rising and the uncertainties of the US trade policies persist.
If the Rupee devaluates further, the RBI may need to intervene to stabilize the currency. For now, rising inflows from FIIs offer some comfort.
In other news, the Sensex and Nifty have plunged in early morning trade due to the fallout of the conflict, even as market watchers aren’t worried much about its impact on the stock market.
