By Nimesh Vora
MUMBAI (Reuters) – India’s forex markets exhibited resilience on Wednesday following India’s strikes in Pakistan, with the rupee’s decline aligning with other Asian currencies and forward premiums witnessing few fluctuations.
The rupee was last quoted at 84.5875 against the U.S. dollar, a 0.2% decline for the day, largely mirroring the 0.2%-to-0.4% drop in its Asian peers such as the offshore Chinese yuan, Thai baht, and Indonesian rupiah.
The rupee maintained a narrow trading range of 20 paisa.
Meanwhile, the dollar/rupee forward premiums exhibited minimal response, with the 1-year implied yield showing little change at 2.17%.
“The relative calm is definitely a surprise. It seems the market isn’t factoring in a major intensification of tensions at this point,” said Kunal Kurani, assistant vice president at Mecklai Financial.
“We’ll have to wait over the next few days to see if the market’s assessment proves correct.”
The rupee’s near-term volatility expectations, too, were largely unchanged following India’s military action, with 1-month implied volatility holding near 6%.
India said it struck nine Pakistani “terrorist infrastructure” sites, some of them linked to an attack by Islamist militants on tourists that killed 26 people in Indian Kashmir last month.
Islamabad called the assault a “blatant act of war” and said it had informed the U.N. Security Council that Pakistan reserved the right to respond appropriately to Indian aggression.
(Reporting by Nimesh Vora; Editing by Savio D’Souza)
