(Updates to close)
* Traders see strong support for rupee at 53.00-53.10/dlr
* Slowing growth, yawning current account deficit threaten rupee
* Euro zone developments to be watched for further cues
By Shamik Paul
MUMBAI, Nov 30 The Indian rupee suffered the worst fall in 16 years in November, plunging nearly 7 percent and hitting a record low, as persistent dollar demand from importers and portfolio outflows due to global risk aversion pounded the local unit.
The rupee continues to face further depreciation threats on the back of a gaping current account deficit and slowing growth.
The worst performer among its Asian peers, the rupee has lost 6.7 percent during the month, taking its fall so far in 2011 to 14.37 percent.
On Wednesday, the rupee closed at 52.20/21 per dollar, 0.35 percent weaker than Tuesday's close, recovering from the day's low of 52.42 after China cut its banks' reserve requirement ratio by 50 basis points, which aided global risk appetite.
"On the domestic front, we are slowing down, and because growth is falling, rupee is under pressure," said Vivek Rajpal, India strategist at Nomura.
Data earlier in the day showed the economy grew at its weakest pace in more than two years in the September quarter, revealing the heavy toll that stubborn inflation, rising interest rates and crisis-hit global capital markets are having on Asia's third-biggest economy.
"We are a current account deficit country, and we fend our current account with capital flows. Global risk aversion is increasing because of the euro zone crisis, and there is always the risk of capital outflows," Nomura's Rajpal said.
India's current account deficit widened to $14.1 billion in the June quarter, compared with $12 billion in the same period a year ago.
Foreign funds have sold Indian shares worth $251.67 million in 2011 until Nov. 29.
Dealers said sticky inflation in India and worries the government could miss its fiscal deficit target of 4.6 percent of GDP for the current financial year is a deterrent for foreign fund inflows.
Traders see no respite for the rupee in the near-term and said it could weaken to 53.00-53.10 per dollar in the next one week.
"53.10 is a strong technical support for the rupee and is not likely to be broken easily," said Ravi Kumar, manager, forex dealer at state-run Canara Bank.
"It is a very good selling level," he said.
The Australian dollar and the euro rose against the U.S. dollar, while stocks turned positive and Bunds pared gains after China surprised with its first cut in banks' reserve requirements for nearly three years.
Traders will continue to eye development in the euro zone for further direction.
Europe faces a crucial 10 days to save the euro zone after agreeing to ramp up the firepower of its bailout fund, but acknowledging it may have to turn to the International Monetary Fund for more help to avert financial disaster.
The one-month offshore non-deliverable forward contracts were quoted at 52.57.
The one-month onshore forward dollar premium was at 28.75 points from 29.75 on Tuesday, the three-month was at steady 64 points, and the one-year premium was at 165.25 points, from 165.
In the currency futures market, the most traded near-month dollar-rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange were at 52.4675, 52.4750, and 52.4700, respectively. Total volume was at $4.99 billion. (Editing by Malini Menon)