* Rupee ends at 54.99/00 per dlr vs 55.23/24 Mon close
* Fitch reiterates its negative outlook on India ratings
* Any rate cut would lead to gains in rupee via equities
By Subhadip Sircar
MUMBAI, Jan 8 The Indian rupee rose on Tuesday
helped by continued inflows into local equities, but a warning
from Fitch on the country's ratings again highlighted the
headwinds facing the domestic currency.
Foreign funds have continued to buy into Indian equities,
having invested over $1 billion already in January after pumping
in $24 billion in 2012, helping shares post their best gains in
But a warning from Fitch Ratings that India was still at
risk of losing its investment grade rating saw the rupee giving
up all gains, before recovering in late session.
"The rupee was helped by some ECB (external commercial
borrowing) flows today. But I think the ratings downgrade threat
and current account deficit will keep a weakening bias for the
rupee," said Uday Bhatt, a forex dealer with UCO Bank.
The partially convertible rupee closed at 54.99/00
per dollar, stronger than Monday's close of 55.23/24, snapping
three sessions of losses. It fell to 55.38 in session at one
point, an over one-month low.
Technicals charts show that the dollar/rupee should find
resistance at 55.45 which is the 76.4 percent retracement of the
55.89-54.04 move between Nov. 26 and Dec. 6.
Fitch reiterated on Tuesday its "negative" outlook on
India's sovereign credit rating, citing concerns about slowing
economic growth, persistent inflationary pressures and an
uncertain fiscal outlook.
The warning comes after data last week showed the country's
current account deficit widened to a record high in the
Dealers are now waiting the release of crucial December
inflation data on Monday to gauge whether the central bank
delivers a much expected rate cut on Jan. 29. Any cut would lead
to a rally in the rupee via gains in equities.
In the offshore non-deliverable forwards, the
one-month contract was at 55.31 while the three-month was at
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 55.21 with a total traded volume of $5.3 billion.
(Additional reporting by Krishnakumar K; Editing by Sunil Nair)