* Strong factory output help rupee off two-week low
* Pull back in shares from over 2 pct fall also helps
* Traders await monsoon forecast update on Thursday
(Updates to close)
By Swati Bhat
MUMBAI, Aug 12 The Indian rupee fell on
Wednesday as deficient monsoon rains and worries over the
spread of swine flu weighed, but it crawled back from two-week
lows after the stock market trimmed sharp losses.
The partially convertible rupee INR=IN ended down 0.8
percent at 48.37/38 per dollar after hitting 48.50, its lowest
since July 30, compared with Tuesday's close of 47.97/98.
"There was dollar buying by foreign institutional
investors. The industrial output figure was better than
expected but the impact was not much on account of worries
about the monsoon and swine flu," said Puneet Sharma, chief
foreign exchange dealer at state-run Allahabad Bank.
June industrial output expanded at its fastest pace in 16
months, beating forecasts by a wide margin, as higher salaries
of government employees and stimulus spending boosted consumer
H1N1 pandemic flu is spreading in India, Thailand and
Vietnam with the onset of Asia's monsoon season, the World
Health Organisation (WHO) said on Tuesday. [ID:nLB713194]
Dealers said they would watch the monsoon forecast update
on Thursday for clues of the impact on the broader economy.
"The outlook is rupee positive. The monsoon data tomorrow
may be somewhat better than what we have seen so far. I expect
the rupee to open around 48.25 levels and then the overnight
dollar moves and Asian stocks would provide direction," Sharma
The monsoon rainfall deficit widened by one percentage
point from the previous day to 29 percent on Aug. 10, with
rains in the soybean-growing central region weakening.
One-month offshore non-deliverable forward contracts PNDF
were at 48.39/49, marginally weaker than the onshore spot rate.
In the currency futures market, the most traded near-month
contract on the National Stock Exchange and MCX-SX closed at
48.4025 and 48.4150 respectively, with the total traded volume
on the two exchanges at a high $2.2 billion.
(Editing by Ranjit Gangadharan)