The Indian rupee (INR) plunged the most in six years amid turmoil in both global equity and currency markets to start the week.

The rupee fell to 70.74 against the US dollar, could test 71.50 level in the coming weeks.

What sparked the overnight currency chaos was China allowing its yuan to pass 7-per-dollar level for the first time since 2008 after President Trump last week escalated the trade war by slapping a 10% tariff on an additional $300 billion of Chinese imports.

The weakness in the rupee was also intensified by uncertainty over Kashmir, a nationwide economic slowdown, and increasing foreign capital outflows.

Cabinet members met with Prime Minister Narendra Modi on Monday to address currency volatility and a deteriorating situation in Kashmir along the Line of Control (LoC).

India removed the special status of Jammu and Kashmir, a move that is expected to increase the deteriorating security situation in the region, Bloomberg noted.

Home Minister Amit Shah told parliament on Monday that Prime Minister Modi scrapped Article 370 of the constitution that granted a degree of autonomy to Kashmire to draft its laws except in communications, defense, finance, and foreign affairs.

"The worries over the political situation in Kashmir and the yuan depreciation are weighing on the currency," said Paresh Nayar, currency and money markets head at FirstRand Ltd. in Mumbai.

On Monday evening, India's Upper House passes a bill splitting Jammu and Kashmir into two different administrative states.

Leading up to Monday's government order, intense fighting between India and Pakistan flared up late last week through the weekend.

Pakistan Prime Minister Imran Khan on Sunday requested the international community to mediate the developing crisis as India continues to strengthen its military forces in Kashmir.

Khan accused India on Saturday of shelling and using cluster bombs on civilians across densely populated areas on the LoC. He asked the United Nations to monitor the situation.

Several Indian television news outlets have reported that Indian military reinforcements are arriving in the Himalayan territory amid threats of conflict with Pakistan.

The India Times reported Saturday that Indian Armed Forces had deployed howitzer artillery pieces in response to what they say Pakistan has broken ceasefire agreements.

Meanwhile, an economic slowdown has plagued Prime Minister Modi's economy, as new data from the Reserve Bank of India showed disbursed retail loans were at their lowest level in 1H19 in more than five years.