On May 7, 2025, the Indian Rupee opened 18 paise lower at 84.62 per dollar, reflecting market reaction to the Indian armed forces' swift and significant action under Operation Sindoor. This operation marked a decisive military response to the Pahalgam terror attack, in which 26 civilians, including a Nepali national, lost their lives just two weeks earlier.

The Indian government confirmed that the Indian Air Force (IAF) had struck nine terror-linked locations, including four in Pakistan and five in Pakistan-Occupied Kashmir (PoK). Notably, the targeted sites included key headquarters of banned outfits—Jaish-e-Mohammed (JeM), Lashkar-e-Taiba (LeT), and Hizbul Mujahideen.

Operation Sindoor: Strategic and Focused

Operation Sindoor was launched in the early hours of May 7 and included precision airstrikes on terrorist camps and infrastructure. This marked India’s most assertive military action since the 2019 Balakot airstrike. The decision came amid mounting evidence that the Pahalgam attack was orchestrated by Pakistan-based terrorists, two of whom were identified as Pakistani nationals.

The nine targets included some of the most well-known operational bases and logistical hubs of Pakistan-backed terror networks. These included:

• Markaz Subhan Allah in Bahawalpur – a key site for Jaish-e-Mohammed operations.

• Sarjal in Tehra Kalan – used for militant training activities.

• Markaz Abbas in Kotli – another JeM stronghold in PoK.

• Syedna Bilal Camp in Muzaffarabad – also affiliated with JeM.

• Lashkar-e-Taiba’s operational base in Muridke, a historically important location for the group.

Each site was carefully selected based on intelligence inputs, ensuring the destruction of terror facilities while avoiding civilian and military infrastructure.

Market Impact: Rupee Reacts to Escalating Tensions

The financial markets quickly absorbed the news of the operation. The Indian Rupee fell to 84.62 against the US Dollar, compared to the previous session's close of 84.43. Market analysts believe that this reaction was driven by geopolitical tension and fear of further escalation along the Indo-Pak border.

However, the fall remained contained, signaling that investors expect the operation to remain tactical and contained, rather than the beginning of a prolonged conflict.

Currency experts suggested that the rupee could remain under pressure in the short term, depending on Pakistan's diplomatic and military response to the strikes. For now, the Indian Defence Ministry has clarified that the operation was non-escalatory and purely counter-terror in nature.

India’s Target Selection Reflects Long-standing Intelligence

The Bahawalpur base—often cited as the nerve centre of Jaish-e-Mohammed’s operations—has been on Indian intelligence’s radar for years. So too has Muridke, the infamous base of Lashkar-e-Taiba. Both of these were considered potential targets in the 2019 Balakot strike, but were left untouched due to escalation risks at the time.

This time, however, India chose to strike them head-on, signaling a zero-tolerance approach to cross-border terrorism.

According to defence officials, these sites had seen a resurgence in activity in recent months, and the strikes were based on satellite imagery, human intelligence (HUMINT), and intercepted communications.

International Reactions and Strategic Implications

The international community has so far responded with measured concern, urging restraint but also acknowledging India’s right to self-defence. Western countries, including the United States and France, have reiterated their support for India’s fight against terrorism.

By limiting the operation to non-military Pakistani targets, India has tried to maintain strategic restraint, even while sending a strong message to both terror outfits and their sponsors.

Political and Military Message Behind Operation Sindoor

The name "Operation Sindoor" itself is symbolically powerful—associated with sacrifice and honour in Indian tradition. It reinforces the idea that India will respond decisively when its civilians are targeted, especially during peacetime.

This operation is not just about military retaliation. It is also about shaping the narrative of national security ahead of India’s ongoing general elections, where security remains a top voter concern.

Moreover, India’s quick and calibrated action aims to deter future attacks, showcasing the capability to strike high-value terror targets across the border with surgical precision.

What Lies Ahead?

While the Indian side has declared the operation complete and non-escalatory, all eyes will be on Pakistan’s next move. The global diplomatic community, meanwhile, is watching closely to ensure that tensions don’t spiral into a broader conflict.

Currency traders, too, will be watching for any geopolitical ripple effects. The Rupee may remain volatile, especially if diplomatic or military tensions flare up again in the region.

Conclusion

Operation Sindoor has firmly re-established India’s military doctrine of pre-emptive self-defence, especially in response to cross-border terrorism. While the Rupee took a hit amid initial market jitters, the controlled nature of the strikes and India’s strategic messaging have helped prevent panic escalation.

India’s response has been resolute yet responsible, designed to uphold national security and project strength without tipping the region into war.

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