After the ceasefire, the Indian rupee has risen due to the easing of tension on the Indo-Pak border. The rupee strengthened by 74 paise to 84.62 against the dollar. Foreign investors' buying supported the local currency.
Rupee Opens Stronger: The Indian rupee has gained value following the reduction of hostilities from the ceasefire at the India-Pakistan border and the favorable impact of the US-China trade agreement on market trends. On Tuesday, the rupee appreciated by 74 paise, reaching 84.62 per dollar. Forex traders attribute this boost to the sustained interest and purchases of Indian assets by foreign investors, which have significantly bolstered the local currency.
Media reports indicate that following the Pahalgam terror attack on April 22, India dismantled nine terrorist bases in Pakistan and occupied Kashmir as part of Operation Sindoor on May 7. Amid heightened tensions between the nations, India and Pakistan declared a ceasefire on Saturday to halt firing and military activities immediately.
Rupee rises after ceasefire
The beneficial impact of the ceasefire between India and Pakistan was evident in the foreign exchange market. On Tuesday, the rupee began trading at 84.70 against the US dollar in the interbank market. Despite an early dip to 84.74, it later rebounded to 84.62 per dollar. The rupee had closed at 85.36 against the US dollar on Friday, resulting in a net gain of 74 paise.
The foreign exchange market remained closed on Monday due to the Buddha Purnima holiday. At the same time, the dollar index, indicating the dollar's global standing, dropped by 20 percent to 101.58 against six major currencies.
Weakness seen in the stock market
On Tuesday, the Indian stock market experienced a downturn. The BSE Sensex decreased by 902.68 points, ending the day at 81,527.22. Simultaneously, the Nifty dropped 207.15 points, reaching 24,717.55. Additionally, Brent crude prices in the international market saw a minor decline, slipping 0.22 percent to USD 64.82 per barrel.
FII activism and global signals
On Monday, foreign institutional investors (FIIs) maintained their investment in Indian stocks despite a downturn in the equity markets, purchasing shares valued at Rs 1,246.48 crore. Concurrently, trade tensions between the US and China have somewhat diminished, as both nations have consented to pause the majority of tariffs levied on one another for 90 days, offering some respite to the global market.