Moody upgrades Indian Rupee
By Contrarian
Published: December 16, 2009
Moody backs the India growth story.
Credit ratings firm Moody’s Investors Service on Tuesday changed its outlook on India’s Ba2 local currency rating to “positive†from “stableâ€, acknowledging the resilience shown by the country to the global financial crisis that has sent bigger economies such as the US and the UK into a deep recession. The outlook upgrade is also indicative of the expectation that India will resume a high growth path with its “underlying credit metrics relatively intactâ€.
Moody’s action comes after India’s $1.2 trillion (around Rs56 trillion) economy expanded 7.9% in the three months to September from a year earlier, the quickest pace in six quarters.
“The outlook revision implies that there is a scope for the local currency rating to be revised upward in the next 12-18 months,†Moody’s sovereign analyst for India, Aninda Mitra, told Mint.
Moody’s ratings start at “C†through “Aaa†in ascending order. All ratings agencies have two national ratings: one a local currency rating and another for foreign currency. A Ba2 rating denotes a less-than-investment grade.
The agency also raised its ceiling on banks’ foreign currency deposits to Ba1 from Ba2 “to better reflect the robust external position of Indiaâ€, but kept unchanged its stable outlook on the foreign currency debt rating of Baa3, the lowest investment grade that the agency assigns.
The bond market remained unmoved after the revision, with the yield on the 10-year bond rising one basis point to 7.59% as current bond yields, according to dealers, have already factored in positive developments on the ratings and growth front.
Fresbee
IC
