Indian rupee sees worst day in 1-1/2 months as shares drop on risk-off

* Rupee ends at 54.47/48 per dlr vs 54.075/085 on Wednesday

* Local shares down 1.6 pct, the biggest daily fall since July 23

* Most state-run bank dealers abstain from trading due to strike

By Subhadip Sircar

MUMBAI, Feb 21 (Reuters) - The Indian rupee fell its most in one-and-a-half months on Thursday as global risk aversion pushed local stocks sharply lower, with the currency awaiting cues from the federal budget next week.

Global risk assets were pummelled as world share markets fell and the dollar and safe-haven assets rose, a day after minutes of the Federal Reserve's last policy meeting cast doubts over how much longer the U.S. central bank would stick to its stimulus plan.

The sell-off was reflected in Indian markets as local shares fell their most in nearly seven months, raising concerns about whether there will be continued inflows into equities that have largely buoyed the rupee so far.

Volumes continued to be thin as there was little participation from state-run banks in the second day of a nationwide strike.

"The fall in the rupee on Thursday was a reflection of the stock market. However, I expect some bunched-up dollar inflows on Friday due to the ongoing strike," said Sudarshan Bhat, chief foreign exchange dealer at Corporation Bank.

He expects the rupee to trade in a 54.25-54.75 range in the run-up to the federal budget.

The partially convertible rupee closed at 54.47/48 per dollar versus its previous close of 54.075/085. It fell 0.7 percent, its biggest daily fall since Jan. 4.

Dealers are looking forward to the federal budget to see whether Finance Minister P. Chidambaram will present a budget that will put fiscal discipline ahead of populist spending.

A budget favourable to rating agencies and foreign investors is likely to trigger a rally in equities and the rupee.

In the offshore non-deliverable forwards, the one-month contract was at 54.82, while the three-month was at 55.48.

In the currency futures market, the most-traded near-month dollar/rupee contract on the National Stock Exchange, the MCX-SX and the United Stock Exchange all closed at around 54.55 with a total traded volume of $6.4 billion. (Editing by Subhranshu Sahu)