Tensions Escalate: Financial Markets React to India-Pakistan Conflict

Pakistan's financial assets took a significant hit on Wednesday, following military strikes by India targeting areas in Pakistan and Pakistani Kashmir. This move, a response to recent killings of tourists, marks a sharp escalation in tensions between the neighboring nuclear powers.

The immediate aftermath saw Islamabad's benchmark stock index plunge by up to 5.8%, with the Pakistani rupee dropping to its lowest position in nearly two weeks against the U.S. dollar. Concurrently, the nation's 2036 international dollar bond witnessed a decline, settling at 72.477 cents.

In contrast, Indian markets displayed resilience. Despite initial declines, the Indian equity benchmarks stabilized, and the rupee dipped slightly by 0.5%. Meanwhile, in Central Europe, the Czech koruna remained firm as anticipation built around upcoming central bank meetings. Notably, regional currencies and stocks experienced mixed reactions to these geopolitical developments.

(With inputs from agencies.)