* Rupee trading at 55.07/09 vs 54.75/76 close on Fri
* USD/INR breaks major 100-day moving average resistance
* Trade deficit widens to $21 bln in Oct
By Subhadip Sircar
MUMBAI, Nov 12 The Indian rupee fell to its
lowest in nearly two months after data showing the a record
trade deficit and a contraction in factory output stoked fears
about economic growth at a time of continued high inflation.
The rupee's fall to as low as 55.12 to the dollar has
erased a rally sparked by the government's announcements of a
slew of fiscal and economic reforms in mid-September that took
the local currency to as high as 51.32 to a dollar on Oct 5.
However, the rupee has steadily slipped since that peak, as
investors resumed their focus on an economy set to grow at its
slowest pace in a decade and on little prospects of immediate
rate cuts as Reserve Bank of India retains its focus on
The trade deficit "is negative on the rupee. The uptrend in
headline WPI into 8 percent has come into radar now. The rupee
will need strong support from the euro to prevent extended
weakness beyond 55.10," said Moses Harding, head of asset
liability management at IndusInd Bank.
The partially convertible rupee was at 55.07/09 per
dollar, after it fell to 55.12, a level last seen Sept 13. It
had closed at 54.75/76 on Friday.
The rupee now remains at near the levels when the government
raised diesel prices and said it would ease foreign investment
rules into the aviation and multi-brand retail sectors, sparking
a rally in domestic markets.
Still, it remains well above the record low of 57.32 hit in
Traders warn more losses could be in the store, after the
rupee fell past the 100-day moving average, which had acted as
major support in recent sessions.
Data on Monday showed the trade deficit widened to $20.9
billion, marking a record, according to a Credit Suisse e-mail
to clients sent after the data.
Other reports also proved worrisome for investors, with
industrial output unexpectedly contracting 0.4 percent in
September, while consumer price inflation remained elevated.
India is due to post October wholesale price index data on
Wednesday, with analysts expecting headline inflation to have
accelerated 7.96 percent, marking an 11-month high.
High inflation will likely deter the central bank from
cutting interest rates this calendar year. The RBI signalled
after its policy review on Oct. 30 any easing in monetary policy
would not come until the January-March quarter.
(Editing by Rafael Nam)