Forex traders said the drop in the rupee was largely due to a spurt in crude oil prices following rising tensions in the Middle East and North Africa.
The rupee opened at 71.18 per dollar on January 21, lower by 8 paise against the previous day's close of 71.10 on some buying of the greenback by banks and importers.
Forex traders said the drop in the rupee was also due to a spurt in crude oil prices following rising tensions in the Middle East and North Africa.
Elevated crude oil prices are putting pressure on the Indian currency. Oil prices rose to their highest in more than a week on January 20 after two large crude production bases in Libya began shutting down amid a military blockade, risking reducing crude flows from the OPEC member to a trickle.
The rupee slipped 3 paise to close at 71.11 against the US dollar on January 20, tracking a steady rise in crude oil prices and weakness in domestic equities.
Experts are of the view that the near-term focus will remain on crude oil prices and foreign fund flows ahead of the Budget.
Equity market benchmark Nifty is likely to consolidate around its crucial support of 12,200 levels amid muted trend seen in other Asian markets.
The fall of 1 percent on January 20 could largely be attributed to correction in four index heavyweights viz Reliance, TCS, Kotak Bank and HDFC Bank.India VIX moved up by 9.06 percent to 15.41 levels. D-Street seems to be witnessing a spike in volatility due to ongoing result season and upcoming Union Budget 2020.
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