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    Default 然upee slide to have less impact on sovereign ratings'

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    Moody's Investors Service, a leading credit rating agency, on Monday, said that depreciating rupee would only have a limited impact on India's sovereign ratings.

    敵overnment foreign currency debt comprises only 7 per cent of total government debt and 5 per cent of GDP (gross domestic product). Most of it is owed to multilateral and bilateral creditors and has a maturity profile that keeps annual foreign currency repayments relatively low. Therefore, the direct effect of depreciation on the government's own debt repayment capacity is limited, said Moody's Investors Service in its weekly Credit Outlook.

    Although depreciation is a credit negative development for Indian firms without export revenues and with foreign currency obligations, the credit effect on the sovereign of these individual firms' credit troubles will be muted.

    However, the rupee's fall is also a result of India's existing credit weaknesses such as loose fiscal policy, which has boosted domestic demand, inflation, and import spending; government subsidies, which support India's reliance on imported commodities; and domestic regulatory uncertainties, which have deterred foreign portfolio and direct investment.
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