Indian Rupee logs worst session since Feb 2023; ends 1.03% lower at 85.72/$

Indian rupee saw the worst session in over two years on Thursday, as the currency came under pressure from rising geopolitical tensions along the border with Pakistan. 

 

The domestic currency closed 89 paise lower at 85.72 after ending at 84.83 against the greenback on Wednesday, according to Bloomberg data. The currency depreciated by 1.03 per cent in today's session, making it the worst day since February 6, 2023. 

 

With Thursday's fall, the currency has fallen by 2.3 per cent in the last five trading sessions. The currency and stock market declined on Thursday after India confirmed it had targeted air defence radars and systems at multiple locations in Pakistan, in retaliation for Pakistan’s attempt to strike several military targets in India.

 

 

The defence ministry said that India's response has been in the same domain with the same intensity as Pakistan's. It has been reliably learnt that an Air Defence system at Lahore has been neutralised. "Indian Armed Forces reiterate their commitment to non-escalation, provided it is respected by the Pakistani military," the official statement said.  

 

 

Rupee witnessed a sharp fall, marking its biggest single-day drop in two years amid escalating tensions along the India-Pakistan border, according to Jateen Trivedi, VP research analyst - commodity and currency at LKP Securities. "Reports of drone attacks and retaliatory strikes over the past 24 hours have heightened geopolitical uncertainty, triggering a risk-off sentiment. If the situation worsens, the rupee may face further pressure, with lower levels of 86.00-86.50 potentially coming into play."

 

On the global front, US President Donald Trump said that a 'major’ trade deal with a big country is coming. "Major trade deal with representatives of a big and highly respected country,” Trump said in a Truth Social post.

 

Meanwhile, the US Federal Reserve held interest rates steady as risks of both higher inflation and unemployment had risen. Jerome Powell stressed that the economy overall has continued to expand at a solid pace.  

 

The change in stance from confidence to caution has rattled investor sentiment and has caused the dollar to gain some strength, Pabari said. The dollar index — a measure of the value of the US dollar relative to a basket of foreign currencies — was up 0.56 per cent at 100.17.

 

Crude oil prices edged higher as uncertainty over trade talks between the US and China weighed on investors' sentiments. Brent crude price was up 1.26 per cent to $61.89 per barrel, while WTI crude prices were higher by 1.43 per cent at 58.90, as of 3:50 PM.