By Swati Bhat
MUMBAI (Reuters) - The rupee gained for a second straight session on Wednesday, boosted largely due to dollar sales by a large petrochemical firm which helped offset the demand for the greenback from oil firms.
The overall rupee outlook remains clouded on the back of the various macro-economic concerns, though in the near-term likely rate cuts are expected to boost foreign fund inflows and help the currency gain.
Traders have discounted a 25-basis-point cut in key rates by the Reserve Bank of India (RBI) at its policy review on January 29 and calls for a bigger cut are slowly growing in the market.
Industrial output data on Friday and the inflation report on Monday will be key in further setting expectations ahead of that meeting, analysts said.
"Oil demand limited gains in the rupee and I heard of some external commercial borrowing inflows as well," said Vikas Babu Chittiprolu, a senior foreign exchange dealer with Andhra Bank.
"I am expecting 54.65 to 55.10 range for tomorrow. Friday's industrial data and Monday's inflation are both important for the market as the rate decision at the end of this month is dependant on them," the state-run bank dealer added.
The partially convertible rupee closed at 54.75/76 per dollar, stronger than Tuesday's close of 54.99/55.00.
Traders said some external commercial borrowing-related inflows were also seen in the market, boosting the rupee further.
However, oil firms, the largest buyers of dollars in the domestic currency market, were seen purchasing the greenback intermittently, preventing sharper gains in the local unit.
In the offshore non-deliverable forwards, the one-month contract was at 55.09 while the three-month was at 55.68.
In the currency futures market, the most-traded near-month dollar/rupee contract on the National Stock Exchange, the MCX-SX and the United Stock Exchange, all closed at around 55.00 with a total traded volume of around $5.4 billion.
(Editing by Sunil Nair)