Indian Rupee Opens at 84.66 Amid Operation Sindoor: Market Insights

India-Pakistan Conflict: Rupee Opens Marginally Down at 84.66 per Dollar in the Wake of Operation Sindoor

May 7, 2025

The Indian rupee opened at 84.66 per US dollar on Wednesday, marking a 31-paise decline from the previous session's close of 84.35. This depreciation follows India's military operation, "Operation Sindoor," which involved missile strikes on nine terrorist targets in Pakistan and Pakistan-Occupied Kashmir. The operation is a direct response to the Pahalgam terror attack that resulted in 26 fatalities two weeks ago. (ABP Live)

Forex Market Reaction

The initial market reaction indicates heightened investor caution. Forex traders anticipate increased demand for the US dollar as a safe-haven asset, leading to potential short-term pressure on the rupee. Anil Kumar Bhansali, Head of Treasury at Finrex Treasury Advisors, noted that the Reserve Bank of India (RBI) is expected to intervene to stabilize the currency and prevent significant depreciation. (The Economic Times)

Geopolitical Tensions and Market Sentiment

The escalation in cross-border tensions has contributed to market volatility. Pakistan's condemnation of India's strikes as a "blatant act of war" has raised concerns about potential retaliatory actions. However, analysts believe that the focused nature of India's operation may mitigate the risk of further escalation, which could help contain the negative impact on market sentiment. (Reuters)

Impact on Stock Markets

Despite the rupee's depreciation, Indian equity markets have shown resilience. The BSE Sensex and Nifty indices opened marginally lower but regained positive territory as the session progressed. Foreign Institutional Investors (FIIs) have continued their buying spree, with cumulative inflows of ₹43,940 crore over the past 14 trading sessions, providing support to the markets. (mint)

Outlook and Investor Considerations

While the immediate impact on the rupee is negative, the situation remains fluid. Investors are advised to monitor developments closely, as further escalation could lead to increased volatility. The RBI's actions will be crucial in managing currency stability and investor confidence in the coming days.