Join our Waitlist for Expert Advice!

India Has Sufficient External Buffers: Fitch The rating agency also added that domestic factors are the primary driver of the RBI's current monetary policy tightening

By Teena Jose

Opinions expressed by Entrepreneur contributors are their own.

You're reading Entrepreneur India, an international franchise of Entrepreneur Media.

Pexels

Fitch Ratings, on Wednesday, said that India has sufficient foreign exchange reserve and its current account reserve is likely to remain at sustainable levels.

"India's external buffers appear sufficient to cushion risks associated with rapid monetary policy tightening in the US and high global commodity a price, limiting any risk to India's sovereign rating from external pressures is limited," said Fitch.

The rating agency also added that, "Public finance remains the key driver of the rating and India is relatively insulated from global volatility due to the sovereign's limited reliance on external financing. India's foreign reserves fell by almost $101 billion in January-September 2022, but are still large at around $533 billion."

The decline has reversed most of the reserve accumulation that happened during the pandemic, and reflects valuation effects, a widening CAD, and some intervention by the Reserve Bank of India to support the rupee's exchange rate.

Fitch said, "Large reserves also provide reassurance about debt repayment capacity. Short-term external debt due is equivalent to only about 24 per cent of total reserves."

"Domestic factors are the primary driver of the RBI's current monetary policy tightening. However, risks to our current forecast that India's repo rate will peak at 6 per cent in 2023 to 2024 are skewed to the upside, as there is a significant chance of rate hikes I the US beyond those in our assumptions, which could put further downward pressure on the rupee and the increase in the imported price inflation," added the rating agency.

Teena Jose

News Desk Reporter with Entrepreneur India

Teena is a post graduate in financial journalism. She has an avid interest in content creation, digital media and fashion.
Social Media

Stop Chasing Algorithms — Here's How Creators Can Take Control of Their Content and Monetize on Their Own Terms

Social media platforms promise creators visibility, but the real challenge lies in relying on algorithms for income.

Business News

This New Restaurant Is Banking on One Dish — Because It's the Only Entrée on the Menu

The new hotspot is gaining buzz on social media for its innovative yet super simple concept.

Leadership

4 Bold Leadership Moves Every Successful CEO Uses to Navigate Change

Ready to turn fear into fuel and lead with confidence? In this article, I share how leaving my corporate job without a plan led me to build a thriving business. Learn four bold strategies to embrace uncertainty and turn challenges into opportunities for growth today.

Business News

This Is the Goal-Setting Method Shohei Ohtani Learned in High School That Helped Get Him to the World Series

The MLB superstar's success did not come as a surprise to him. He had a plan.

Business News

LinkedIn Is Verifying Users for Free — And Kicking Out Fake Recruiters in the Process

LinkedIn is more than halfway to its goal of verifying 100 million users, and unlike X and Meta, they're not charging for it.