Rupee Rebounds Amidst Geopolitical Tensions: Appreciates 38 Paise to ₹84.65

The Indian rupee opened stronger on Thursday, recovering from its steepest decline in nearly a month, as markets closely monitor escalating tensions between India and Pakistan. The domestic currency commenced trading at ₹84.65 against the US dollar, a 38 paise appreciation from the previous close of ₹84.83. 

Geopolitical Backdrop

The rupee's recovery follows India's military operation, dubbed 'Operation Sindoor,' which targeted nine sites in Pakistan and Pakistan-administered Kashmir in response to a deadly militant attack in Indian Kashmir. Pakistan has vowed retaliation, stating it "reserves the right to respond, in self-defence, at a time, place, and manner of its choosing." 

Despite the heightened geopolitical risks, foreign portfolio investors (FPIs) remained net buyers of Indian equities, purchasing stocks worth ₹2,585.86 crore on Wednesday. This suggests a degree of investor confidence in India's economic fundamentals amidst regional tensions. 

Global Economic Indicators

On the international front, the US Federal Reserve maintained its interest rates, citing rising risks of both higher inflation and unemployment. The dollar index, which measures the US dollar against a basket of currencies, edged up by 0.02% to 99.63. Crude oil prices also saw an uptick, with Brent crude rising by 0.74% to $61.57 per barrel, reflecting market uncertainties over US-China trade talks. 

Market Outlook

While the rupee's rebound indicates a temporary stabilization, analysts caution that the currency remains vulnerable to further geopolitical developments. The Reserve Bank of India (RBI) is closely monitoring the situation and may intervene to prevent excessive volatility. Market participants are advised to stay vigilant as the situation evolves.

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