Concerns over a potential escalation of the geopolitical dispute between India and Pakistan, along with a dip in Asian peers, has caused the Indian rupee to plunge, recording its largest one-day decline in a month.

The Indian rupee saw its lowest performance since April 9 as it closed at 84.8250 against the US dollar, down about 0.5 percent.

Depending on how things develop, the rupee is probably going to continue to see sporadic pressure, according to a trader with a Singapore-based hedge fund.

According to the trader, the Reserve Bank of India may intervene to curb sudden fluctuations, and bullish wagers on the currency may be reduced in the near future.

According to a trader at a bank in Mumbai, the rupee's losses were restrained during the day due to dollar selling activity from a major conglomerate close to the 84.90 mark and sporadic offers from state-run institutions.

Asian currencies saw a day-long decline, with the Indonesian rupiah down 0.5 percent and the offshore Chinese yuan down to 7.22.

While the benchmark 10-year bond yield dropped to 6.3381 percent, India's key equity indexes, the BSE Sensex and Nifty 50, fluctuated between gains and losses before finishing marginally higher.

 

Later in the day, investors await the Federal Reserve's policy announcement. It is anticipated that benchmark interest rates would remain unchanged.

India claimed to have hit nine "terrorist infrastructure" locations in Pakistan, some of which were connected to the 26-person militant attack on tourists in Indian Kashmir last month.

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In the fiercest conflict between the nuclear-armed neighbors in almost 20 years, Pakistan claimed to have shot down five Indian fighter jets.