India among the least vulnerable to monetary pressures: Moody's

According to Moody, the strengthening of the US dollar since mid-April has prompted a strong currency depreciation and / or a significant decrease in foreign exchange reserves in a number of emerging and frontier countries.

Even though the rupee fell below the intra-day 69 against the dollar on Thursday, Moody's said that India is "India's limited external vulnerability is supported by a a significant and relatively stable domestic funding base for public debt, which contributes to the resilience of the economy by protecting it from abrupt changes in external financing conditions, "said Moody's. China, Mexico and Russia were also among the least vulnerable to currency pressures, she said.

Although India's debt is relatively low, the average maturity of the debt is close to 10 years and over 96% currency. "India's low dependence on foreign currency borrowings to finance its debt limits the risk that the depreciation of the currency will result in a drop in debt" , said Moody's

.The prices of oil remain modest relative to GDP and are largely financed by equity inflows, including foreign direct investment, "Moody said. "The large accumulation of foreign exchange reserves of India in recent years at historic highs provides a buffer of support to help mitigate the risk of external vulnerability. Overall, the EVI (External Vulnerable Indicator) of India of about 74% reflects a relatively low external vulnerability.

According to Moody & # 39; s, the strengthening of the dollar since mid-April has caused a sharp depreciation of the currency and / or foreign exchange reserves in a number of emerging and frontier countries. To the extent that these currency fluctuations reflect significantly lower outflows or external inflows, they are negative for sovereigns with significant external financing needs, she said.

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