The path for Indian rupee and government bonds this week hinges on the geopolitical fallout from the militant attack in Kashmir, traders said.

A day after the U.N. appealed for restraint following Tuesday's deadly attack in Indian-administered Kashmir, India reported an exchange of fire across the de facto border in the disputed region.

NEW DELHI — A deadly attack on tourists in Indian-controlled Kashmir has again moved India and Pakistan closer to war as the two rivals downgraded diplomatic and trade ties, closed the main border crossing and revoked visas for each other’s nationals.