(Updates to close)
* Traders see strong support for rupee at 53.00-53.10/dlr
* Slowing growth, yawning current account deficit threaten
* Euro zone developments to be watched for further cues
By Shamik Paul
MUMBAI, Nov 30 The Indian rupee suffered
the worst fall in 16 years in November, plunging nearly 7
percent and hitting a record low, as persistent dollar demand
from importers and portfolio outflows due to global risk
aversion pounded the local unit.
The rupee continues to face further depreciation threats on
the back of a gaping current account deficit and slowing growth.
The worst performer among its Asian peers, the
rupee has lost 6.7 percent during the month, taking its fall so
far in 2011 to 14.37 percent.
On Wednesday, the rupee closed at 52.20/21 per
dollar, 0.35 percent weaker than Tuesday's close, recovering
from the day's low of 52.42 after China cut its banks' reserve
requirement ratio by 50 basis points, which aided global risk
"On the domestic front, we are slowing down, and because
growth is falling, rupee is under pressure," said Vivek Rajpal,
India strategist at Nomura.
Data earlier in the day showed the economy grew at its
weakest pace in more than two years in the September quarter,
revealing the heavy toll that stubborn inflation, rising
interest rates and crisis-hit global capital markets are having
on Asia's third-biggest economy.
"We are a current account deficit country, and we fend our
current account with capital flows. Global risk aversion is
increasing because of the euro zone crisis, and there is always
the risk of capital outflows," Nomura's Rajpal said.
India's current account deficit widened to
$14.1 billion in the June quarter, compared with $12 billion in
the same period a year ago.
Foreign funds have sold Indian shares worth $251.67 million
in 2011 until Nov. 29.
Dealers said sticky inflation in India and worries the
government could miss its fiscal deficit target of 4.6 percent
of GDP for the current financial year is a deterrent for foreign
Traders see no respite for the rupee in the near-term and
said it could weaken to 53.00-53.10 per dollar in the next one
"53.10 is a strong technical support for the rupee and is
not likely to be broken easily," said Ravi Kumar, manager, forex
dealer at state-run Canara Bank.
"It is a very good selling level," he said.
The Australian dollar and the euro rose against the U.S.
dollar, while stocks turned positive and Bunds pared gains after
China surprised with its first cut in banks' reserve
requirements for nearly three years.
Traders will continue to eye development in the euro zone
for further direction.
Europe faces a crucial 10 days to save the euro zone after
agreeing to ramp up the firepower of its bailout fund, but
acknowledging it may have to turn to the International Monetary
Fund for more help to avert financial disaster.
The one-month offshore non-deliverable forward
contracts were quoted at 52.57.
The one-month onshore forward dollar premium was at
28.75 points from 29.75 on Tuesday, the three-month was
at steady 64 points, and the one-year premium was at
165.25 points, from 165.
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 were at
52.4675, 52.4750, and 52.4700, respectively. Total volume was at
(Editing by Malini Menon)