New Delhi: India is among the 5 countries including China which are least vulnerable to currency pressures amid strengthening of the US dollar as the country has low reliance on external capital inflows, Moody’s said on Thursday.
The report came on a day when rupee hit all-time low in intra-day trade against the dollar.
Since mid-April, the dollar has strengthened which has led to sharp currency depreciation and significant declines in forex reserves in a number of emerging and frontier market countries, increasing credit risks for those with large external funding needs, said Moody’s.
“Brazil, China, India, Mexico and Russia are among the least vulnerable to tightening external financing conditions because of their low reliance on external capital inflows,” it said.
It said that India’s limited external vulnerability is supported by a large and relatively stable domestic financing base for government debt, which contributes to the resilience by sheltering it from abrupt changes in external financing conditions.
“Although India’s debt affordability is relatively weak, the average maturity of debt is close to 10 years and over 96 per cent of it is in local currency,” said the report.
India’s build-up of forex reserves in recent years to all-time highs provides a support buffer to help mitigate external vulnerability risk, said Moody’s....