MUMBAI: Indian rupee declined for the first time in three days after geopolitical tensions escalated with Pakistan claiming airspace violation by its neighbour.
Indian fighter jets violated an agreed border between the two countries, the Pakistani army said Tuesday, as tensions between the nuclear-armed rivals rose following a major terrorist attack in Kashmir this month.
The rupee slid 0.4% to 71.2475 per dollar, while Nifty stock futures dropped 0.7% at 9.04am Mumbai time.
“It’s hard to imagine these tension subside going into the election period and this will remain an ongoing overhang on the rupee,” said Prakash Sakpal, an economist at ING Groep NV in Singapore.
“The aberration of the rupee from a positive sentiment in broader EM space is certainty the result of heightened border tensions with Pakistan.”
Indian fighter jets destroyed a major terrorist camp in Pakistan, the ANI news agency said, as tensions between the nuclear-armed rivals rose following an attack in Kashmir earlier this month.
Quoting unnamed sources in the Indian Air Force, ANI said a dozen Mirage 2000 Indian fighter jets dropped 1000 kilogram bombs on terror camps across the Line of Control, the de-facto border between the two countries in disputed Kashmir.
Indian defence ministry spokesman Colonel Aman Anand did not respond to a call and text for comment.
The rupee is already Asia’s worst performing currency this year ahead of general elections due by May where Prime Minister Narendra Modi faces a tough fight from opposition parties.