Indian Rupee Shows Signs of Recovery Amid Geopolitical Tensions

 

The Indian rupee is showing signs of recovery, opening at around 84.72–84.74 against the U.S. dollar on May 8, 2025, up from 84.8250 in the previous session. This follows its sharpest one-day drop in nearly a month after India's missile strikes on Pakistan and Pakistan-administered Kashmir. Pakistan has threatened retaliation, stating it would target military installations, though no immediate response has occurred. This temporary pause has offered modest support to the rupee.

Foreign investors were net buyers of Indian equities on May 6, suggesting confidence that the conflict would not intensify significantly. Meanwhile, most Asian currencies weakened against the U.S. dollar after the Federal Reserve maintained its policy rate, expressing concerns over rising inflation and unemployment. Other key indicators include a 0.4% rise in Brent crude to $61.3 per barrel, a dollar index at 99.66, and a 10-year U.S. note yield of 4.28%