"Currency market outlook has changed overnight due to sudden cross-border tension," said Keta Kurkute, VP-Forex Advisory at Mecklai Financial Services, a currency risk management firm. "The rupee may depreciate to 67.50 against the dollar in the next few days if the situation with Pakistan worsens, some dealers said. A sharp dip triggered stop-losses for investors, who short-sold the dollar in the forwards market.Some overseas investors, who were enjoying the luxury of unhedged positions, have started protecting their investments in India. "The market was caught on the wrong foot as carry traders were short USD and had to run for cover as prices spiked," said Anindya Banerjee, a currency analyst at Kotak Securities. "Barring such an event (surgical strike), we can expect normalcy to return soon," Banerjee said.

Source: Economic Times September 29, 2016 15:22 UTC