* Rupee at 53.015/025/dlr vs 52.8050/8150 prev close
* Inflation at 10-month high, dimming rate cut hopes
* Not all analysts see RBI on hold this month
By Subhadip Sircar
MUMBAI, Oct 15 The Indian rupee fell for a
second successive session on Monday after inflation data was
stronger than expected, pushing back hopes for a rate cut that
investors had hoped would help boost growth and spark further
foreign flows into equity markets.
The wholesale price index rose 7.8 percent in September from
a year ago, data on Monday showed, marking a 10-month high and
undermining the government's push for the Reserve Bank of India
to lower interest rates.
The prospect the central bank will remain on hold, despite
Finance Minister P. Chidambaram's pressure, clouds the outlook
for markets considerably after the rupee and domestic stocks had
rallied last month, while foreign investor flows had surged.
The local currency has already seen lacklustre performance
in recent days, posting its biggest weekly loss in
three-and-half months last week, as the impact from last month's
government fiscal and economic reforms fade.
"The inflation numbers are rupee negative. We have to wait
and see whether the government announces any further measures.
Otherwise, I expect the rupee to be range-bound in a 52.75-53.20
band to the dollar," said Naveen Raghuvanshi, associate vice
president at Development Credit Bank.
The partially convertible rupee closed at
53.0150/0250 per dollar, down from its previous close of
52.8050/8150, as per the State Bank of India closing rate.
The September inflation data could recalibrate expectations
ahead of the Reserve Bank of India's policy review on Oct. 30.
Nomura said it expects the central bank to hold rates,
predicting food and the overall wholesale price index could
"inch higher" in the coming quarter due to the second-round
impact of the diesel hikes last month.
However, RBS saw "scope" for the RBI to cut rates by 25
basis points this month, saying the acceleration in food prices
had eased, while noting a hike in fuel prices had been the key
reason behind September's stronger-than-expected inflation.
Global factors will also be key for the rupee, especially as
markets await clarity on whether Spain will request a bailout.
In the offshore non-deliverable forwards market, the
one-month contract was at 53.22 and the three-month at 53.72.
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 all closed at around 53.03
with a total traded volume of around $5.4 billion.
(Editing by Rafael Nam)