India has strong forex reserves to face best macro difficulties despite the recent fall in 2022: S&P

Extensive external forces on developing countries

A report by the US -based rating agent, S&P Global Ratings has shown that the developing country is facing extensive external pressure from higher commodity prices, the dominance of US dollars, and tightening financial conditions.
Inda is no exception, with the characteristics of these factors including a higher running balance deficit and higher domestic inflation rates.
However, India is still in a better position among peers. “The main differentiator for India continues to be that this country faces these challenges, this pressure is from the position of relative power,” said Andrew Wood, Director of Public and International Finance Rating.

India has buffers built against cycles difficulties

He said that India has several buffers built against cycles difficulties. This does not imply short -term material pressure for credit feasibility.
“We have recorded since the early Pandemic phase of India became a clean creditors for the world. And what does that mean is that the state has built buffer on the difficulties of such cycles, which we are experiencing today, “Wood said.

India’s foreign exchange on September

India’s foreign exchange reserves reached $ 570 billion on August 12. Down $ 70 billion from $ 642 billion held on September 3, 2021.
There has been a decrease in India’s gross foreign exchange reserves in recent months due to the fall of the Rupee value to the dollar and high crude oil prices.
However, if this reserve is compared to his historic reserves over the past 20 years, based on nominal value, it is high, according to wood.

In addition, Wood said that he hoped for reserves to recover in moderate to around $ 600 billion at the end of this year, and remain relatively flat for the next few years.
The market developed in the face of several macroeconomic challenges, but a global rating agent believes that can withstand the phase, thanks to low external debt and strong forex reserves.
Wood also said has a strong external balance and limited external debt.

The global S&P ranking has shown

The Global S&P ranking has shown that most of the developing markets are facing extensive external pressures such as high commodity prices and dollar dominance.
However, the agency believes that India is still in a better position among its colleagues.
There is no short -term material pressure for credit feasibility.

Leave a Comment