Moody's Investors Service on Wednesday raised India's local-currency debt rating by one level to qualify for the lowest investment grade, matching it considering the country's foreign currency bond grade.
Together with the upgrade, India's local currency bonds actually have become investment grade. Baa3 rating would be the lowest investment grade.
The local currency ratings upgrade assume significance because the rupee had depreciated by almost 20 % against dollar during the past four months. Rupee would be the worst performing currency among Asian countries.
Moody's has unified India's local and foreign currency bond ratings keeping a well balanced outlook for the economy.
Moody's said it doesn't now see "justification for a rating bias in favour of either local currency or foreign currency government debt".
"Today's rating action was following Moody's Ratings Implementation Guidance that Moody's will keep a gap between a government's domestic and foreign currency debt ratings infrequently and just in compelling cases," Moody's said in a statement.
India's Baa3 rating incorporates credit strengths for instance a large, diversified economy, robust medium-term growth prospects as well as a strong domestic savings pool that facilitates the financing and refinancing of a typical government's relatively high debt burden.
Additionally it encompasses credit challenges for example wide and chronic fiscal deficits, a policy process often hamstrung by domestic politics, susceptibility to inflationary pressures, as well as the limitations that poor social and physical infrastructure place on growth, the US-based Moody's said.
Moody's said the downward pressure on India's economic growth will persist for the following two quarters.
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