The Indian rupee and other emerging-market currencies are facing renewed selling pressure as the conflict between Iran and Israel escalates.
The widening military confrontation is triggering a flight to safety, prompting investors to reduce exposure to riskier assets and emerging-market debt.
The escalation follows recent Israeli strikes on Iranian military targets in response to a missile attack on northern Israel.
This cycle of retaliation has intensified regional tensions, raising concerns about potential disruptions to global energy supplies and trade routes.
The resulting uncertainty is weighing heavily on currencies in developing economies that are sensitive to commodity price shocks and capital flow volatility.
Market participants are for further signs of escalation.