India-Pakistan War Fallout Would Spread Far And Wide

2025-04-29 06:15:29

(MENAFN- Asia Times) Global investors are watching with rising anxiety as tensions between India and Pakistan threaten to spiral into open armed conflict. The negative implications for markets could be deeper and more immediate than many realize.

Following a deadly attack on tourists in Pahalgam, Kashmir that left 26 dead, Pakistan's Defense Minister Khawaja Muhammad Asif has warned that an Indian military incursion is“imminent.”

Reinforcements have already been deployed along the border. At the same time, New Delhi is weighing options after accusing Islamabad of supporting the militant group that has claimed responsibility for the attack - a charge Pakistan denies.

As accusations harden into action, the risk of a destabilizing confrontation between two nuclear-armed powers grows by the hour. Markets hate uncertainty, and this latest escalation plunges one of the world's fastest-growing economic regions into exactly that.

Kashmir has always been a flashpoint between India and Pakistan, but the current standoff comes at a far more precarious time: when global growth is fragile, risk appetite is deteriorating and major economies are increasingly retreating into protectionism.

Already, investors are beginning to recalibrate. Currency traders have started to hedge against greater volatility in both the Indian rupee and the Pakistani rupee. Bond markets are showing early signs of pricing in geopolitical risk premiums.

Global equity markets - already jittery from trade wars - could be dealt another blow if hostilities deepen, especially if energy supplies or major regional trade routes are threatened.

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