By Nimesh Vora
MUMBAI (Reuters) -The Indian rupee is experiencing a choppy session on Tuesday amid nervousness about the possibility of heightened tensions between New Delhi and Islamabad, leaving traders on high alert for news.
After opening on a weak note, the rupee briefly touched 84.95 – its highest level this year – only to plummet to near 85.40. The drop to 85.40 was linked to stop losses and headline risk.
The rupee was last quoted at 85.21 to the U.S. dollar, down 0.2% on the day.
An FX spot trader at a bank said the rupee was “just too volatile”, and that the market was “highly sensitive” to any form of India-Pakistan news. The trader emphasised the need to be very nimble and to keep position sizes small.
Anxiety stemming from a Pakistani official’s comments late on Monday was likely responsible for the rupee’s wild fluctuations, bankers said.
Pakistan’s defence minister said a military incursion by neighbouring India was imminent in the aftermath of a deadly militant attack on tourists in Kashmir last week.
The price action on Tuesday showed that one headline can “change a big figure” on the USD/INR pair, a trader at a private sector bank added.
Most other Asian currencies were higher on Tuesday, boosted by the softer dollar index.
(Reporting by Nimesh Vora; Editing by Janane Venkatraman)
