Dubai: The Indian rupee dropped to its lowest level in nearly a week, following rising tensions with Pakistan.
After staying relatively stable over the past few days, the Asian currency on Tuesday slumped to 19.41 against the UAE dirham, the lowest since February 20. The currency also weakened to 71.2 per US dollar.
Fighter jets from the Indian Air Force have recently crossed the line of control between India and Pakistan, and bombed a military training camp in Balakot in what is considered the first attack since 1971.
“It’s hard to imagine these tension subside going into the election period and this will remain an ongoing overhang on the rupee,” Prakash Sakpal, an economist at ING Groep NV in Singapore was quoted by Bloomberg as saying.
“The aberration of the rupee from a positive sentiment in broader EM space is certainty the result of heightened border tensions with Pakistan.”
The Asian currency had earlier hit fresh record lows, breaching the 20 mark against the UAE dirham late last year due to a stronger US dollar and higher crude oil prices.
There have been speculations that the currency could slide further this year, enabling non-resident Indians in the UAE to enjoy stronger remittance power.