Silverlining: Moody146;s ups foreign currency rating

After Fitch Ratings, it was Moody8217;s Investors Service to upgrade India. On Thursday, the rating firm upgraded India8217;s ceiling for foreign currency bonds and government8217;s foreign currency issuer ratings to 8216;BAA38217; from 8216;BA18217; due to a reduction in external vulnerability, rising foreign investment and vibrant economic growth. The US-based Moody8217;s said the outlook for both the ratings are stable.

Moody8217;s also revised upward its outlook on the 8216;Ba28217; country ceiling for foreign currency bank deposits to 8216;stable8217; from 8216;negative8217;. The outlook on the government8217;s 8216;Ba28217; domestic currency rating remains negative. It said the principal driver behind the rating changes is the reduction in external payments vulnerability. Forex reserves have also increased to over 100 billion, and surged by 1.7 billion to 103.8 billion in the week up to January 9.

In statement issued in London, it was pointed out that in addition to the external liquidity situation, the country8217;s more resilient economic performance was seen during 20028217;s drought-induced shock when gross domestic product growth stayed above four per cent. Forecasts for the current year8217;s expansion have been adjusted upward to eight per cent.

Moody8217;s said the concrete progress on controlling the fiscal deficit across all levels is still desirable in order to stabilise the government8217;s domestic currency rating.