Rating upgrade may not translate into FPI inflows

THE DEPRECIATING RUPEE and global uncertainties will likely limit foreign inflows into government securities going ahead despite the rating upgrade by S&P, said experts.

- CHRISTINA TITUS

On August 14, the rating agency upgraded India's sovereign rating to 'BBB' from 'BBB-' with a stable outlook, citing economic resilience and sustained fiscal consolidation.

"The currency risk will limit the foreign inflows as their returns will get affected. In the current financial year, the rupee depreciated more than 2% and underperformed its Asian peers despite a weakened dollar index, leading foreign investors to shy away from India," said Madhavankutty G, chief economist, Canara Bank, adding: "As geopolitical situation is still fluid, it will not improve the confidence."