The Indian rupee has weakened sharply to log its steepest fall in more than two years as the ongoing India-Pakistan conflict hurt the currency alongside the country’s bonds and equities, Reuters reports.

The rupee rose at the start of the session but weakened sharply after India said it had “neutralised” attempts by Pakistan to “engage” several military targets in its northern and western regions.

The rupee closed down 1 per cent at 85.71 against the US dollar, its worst day since February 2023, after hitting a low of 85.7625 during the session. Benchmark Indian equity indexes, the BSE Sensex and Nifty 50, ended down 0.5pc and 0.6pc, respectively while the yield on India’s benchmark bond rose nearly seven basis points to 6.3983pc.