New Delhi: The Indian rupee suffered its steepest single-day drop in over two years. The sharp decline came as geopolitical tensions with Pakistan escalated.
On Thursday, the rupee closed at 85.513 per U.S. dollar, down 0.93% from the previous day. It marked the currency’s biggest daily fall since early 2023.
Tensions Shake Investor Confidence
Market analysts blamed the currency drop on rising fears of conflict with Pakistan. The recent military actions have unsettled investors.
“The rupee fell as risk sentiment deteriorated,” said a forex trader in Mumbai. “Capital flight toward safer currencies like the dollar increased.”
Read: Gold Price Drops by Rs4,200 Per Tola on Wednesday in Pakistan
Rapid Slide in Just Days
In the last week, the rupee hovered around 84.295 to 84.721. On May 7, it stood at 84.721, and on May 6, at 84.305. The spike to 85.513 on May 8 stunned market observers.
Dollar Strength and IMF Factors
The fall wasn’t only about India-Pakistan tensions. A stronger U.S. dollar and global market uncertainty also played a role. IMF-related speculation further pressured emerging markets.
The Reserve Bank of India is closely watching the rupee. No official intervention was confirmed as of Thursday evening.
Uncertain Outlook
Economists believe the rupee may face more pressure if cross-border tensions persist. “Unless the situation calms, we may see further depreciation,” said an economist from Delhi.
For now, traders remain cautious. Exporters may benefit slightly, but importers could see rising costs.
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