The Indian rupee is facing tough times. It’s losing value against the US dollar and experts say it might drop even further possibly to 87 rupees per dollar. This is happening because of rising tensions between India and Pakistan especially after recent military actions called Operation Sindoor.
Why Is the Rupee Falling?
The main reason for the rupee’s weakness is the conflict between India and Pakistan. In recent days there have been serious military actions. India launched Operation Sindoor which involved missile and drone strikes on what it says were terrorist bases in Pakistan and Pakistan occupied Kashmir. This was in response to a deadly attack in Jammu & Kashmir’s Anantnag on April 22, 2025 where 26 people were killed. India blames Pakistan for supporting the attackers though Pakistan denies this.
Pakistan in turn says it shot down Indian drones and claims India attacked its cities like Lahore and Karachi. Both countries are accusing each other of escalating the situation. This back and forth has created a lot of uncertainty and when there’s uncertainty money markets get nervous. Investors start pulling their money out of India which weakens the rupee.
On May 7, 2025 the rupee was at 84.62 against the dollar but by May 8 it had fallen to 85.79 a big drop in just a few days. Posts on X and news reports say this is the rupee’s biggest decline since February 2022. If the conflict does not calm down analysts warn the rupee could hit 87 a level that would make things more expensive for Indians.
How Does the Conflict Affect the Economy?
When two countries especially neighbors with nuclear weapons like India and Pakistan are in conflict it shakes up the economy.
- Foreign Investors Get Scared: People who invest money in India’s stock market or businesses don’t like risks. When they hear about drone attacks, missile strikes and talk of war they often sell their investments and move their money to safer places. This reduces demand for the rupee making it weaker.
- Higher Oil Prices: India imports a lot of oil and conflicts in any part of the world can push oil prices up. If the India-Pakistan tension spreads or involves other countries oil could get more expensive. Since India pays for oil in dollars a weaker rupee means spending more to buy the same amount of oil which hurts the economy.
- More Defense Spending: With all the military activity India might need to spend more on defense like buying weapons or increasing security. This could mean less money for things like roads, schools or hospitals which are important for growth.
- Market Disruptions: The conflict has already caused some chaos. For example 24 airports in India were shut down temporarily because of the threat of Pakistani drones and missiles. Schools in border areas like Rajasthan have closed and there have been blackouts in cities like Jammu. These disruptions make it harder for businesses to operate which can slow down the economy.
What Is Operation Sindoor?
Operation Sindoor is India’s military response to what it calls terrorist activities supported by Pakistan. On May 7, 2025 India fired 24 missiles in just 25 minutes targeting nine sites in Pakistan and Pakistan-occupied Kashmir. The Indian government says these were “terrorist camps” linked to groups like Jaish e Mohammed and Lashkar e Taiba. India’s Defense Minister, Rajnath Singh called it a “war to end terrorism.”
Pakistan, however says the strikes killed 31 people including civilians and damaged places like mosques. They claim they shot down 25 Indian drones and even five Indian fighter jets though India has not confirmed these losses. Pakistan’s Prime Minister, Shehbaz Sharif called India’s actions an “act of war” and promised to fight back.
This tit for tat has made the situation very tense. Both sides are using advanced weapons like India’s S-400 air defense system and Pakistan’s Chinese-made J-10 aircraft. The world including the US and Iran is urging both countries to calm down to avoid a bigger war.
What Does This Mean for Regular People?
A weaker rupee affects everyone in India.
- Higher Prices: Things like fuel imported goods (like electronics or clothes) and even some foods could get more expensive because they cost more in rupees.
- Travel Costs: If you are planning to travel abroad or study overseas it will cost more because your rupees won’t go as far.
- Jobs and Businesses: If foreign investors pull out companies might struggle which could lead to fewer jobs or lower salaries.
On the flip side a weaker rupee can help some businesses like those that export goods because their products become cheaper for foreign buyers. But overall the negative effects of a falling rupee tend to hit harder especially for regular people.
What’s Next?
The future of the rupee depends on whether India and Pakistan can de-escalate. The US Secretary of State, Marco Rubio has spoken to leaders from both countries asking them to take steps to avoid a full blown war. Iran is also trying to mediate. If these efforts work and the fighting stops the rupee might stabilize.
However if the conflict grows the rupee could weaken further. Analysts are watching closely and some predict it could hit 87 against the dollar if things do not improve. India’s stock market has stayed relatively calm so far but that could change if the situation worsens.
What Can India Do?
To protect the rupee India’s government and the Reserve Bank of India (RBI) might take steps like:
- Selling Dollars: The RBI can use its dollar reserves to buy rupees which could help support the currency.
- Raising Interest Rates: Higher interest rates can attract foreign investors but this could slow down economic growth.
- Diplomacy: Working with other countries to calm tensions with Pakistan is crucial to reducing uncertainty.
For now the focus is on avoiding a bigger conflict. India’s leaders like Foreign Minister S Jaishankar, have said they will respond firmly to any escalation but they are also under pressure to keep the situation under control.
Final Thoughts
The Indian rupee’s weakness is a direct result of the India-Pakistan conflict and Operation Sindoor. The back and forth attacks, drone strikes and missile launches have created fear in the markets pushing the rupee down. If the tensions continue the rupee could fall to 87 against the dollar making life more expensive for many Indians. The hope is that both countries listen to global calls for peace and avoid a larger war. For now all eyes are on the border and the currency market as India navigates this challenging time.