India-Pak ceasefire effect: Rupee rises 73 paise against US dollar

Following the recent ceasefire between India and Pakistan, trader sentiment in the forex market saw a positive shift, leading to the Indian rupee rising by 73 paise to open at 84.6512 against the US dollar. 

The local currency’s opening figure represents a bounce back from a previous close of 85.3750 against the dollar on May 9. It's worth noting that Indian money markets were closed on May 12 in observance of Buddha Purnima.

The recent ceasefire has significantly lifted the sentiment within the market. Abhishek Goenka, Founder & CEO of India Forex Asset Management - IFA Global, remarked, “The ceasefire over the weekend has alleviated onshore sentiment. With a major geopolitical uncertainty now resolved, other positive developments that had previously been overshadowed by tensions, such as the recent Free Trade Agreement between India and the UK as well as the potential India-US trade deal, have come back into focus.”

On May 10, India and Pakistan reached an agreement for a "full and immediate ceasefire" following days of heightened military tensions. This announcement was made by US President Donald Trump after mediation efforts by the United States.

In a post on Truth Social, President Trump stated, “I am pleased to announce that India and Pakistan have agreed to a FULL AND IMMEDIATE CEASEFIRE, following a long night of talks. Congratulations to both countries on using common sense and great intelligence.”

This ceasefire comes after a tragic terrorist attack in Pahalgam, Jammu and Kashmir, last month which resulted in 26 fatalities. In retaliation, India launched 'Operation Sindoor', targeting terrorist bases in Pakistan and Pakistan-occupied Kashmir, reportedly resulting in over 100 militant casualties, according to Indian officials.

On May 9, the Indian rupee had begun to recover its previous losses, likely supported by intervention from the Reserve Bank of India (RBI) to prevent further sharp depreciation amid escalating border tensions with Pakistan.