The Indian rupee cheered the Moody's rating upgrade, posted the biggest single-day gain in last 4 years at the interbank foreign exchange market on Friday.
The Indian rupee cheered the Moody’s rating upgrade, posted the biggest single-day gain in last 4 years. The rupee surged 69.63 paise or 1.06% to 64.62 against the US dollar at the interbank foreign exchange market on Friday led by the optimism flow over rating upgrade. US-based credit rating agency Moody’s upgraded India’s sovereign credit rating by a notch to ‘Baa2’ with a stable outlook on the back of improved growth prospects driven by economic and institutional reforms. The rupee added 57 paise to open at 64.75 a piece US dollar. Yesterday, the rupee dropped by 11 paise to close at 65.32 against the US dollar.
The rating upgrade came after a gap of 13 years, Moody’s had last upgraded India’s rating to ‘Baa3’ way back in 2004. In 2015, the rating outlook was changed to ‘positive’ from ‘stable’. “The decision to upgrade the ratings is underpinned by Moody’s expectation that continued progress on economic and institutional reforms will, over time, enhance India’s high growth potential and its large and stable financing base for government debt, and will likely contribute to a gradual decline in the general government debt burden over the medium term,” Moody’s said in a statement.
Meanwhile, The key equity indices Sensex and Nifty also opened with massive gains on Friday after Moody’s upgraded India’s sovereign credit rating to ‘Baa2’. BSE Sensex gained 281.65 points or 0.85% to open at 33,388.47 while NSE Nifty added 109.8 points or 1.07% to start at 10,324.55. Within minutes of opening, the benchmark Sensex extended the gains, advancing as much as 414 points to hit the day’s high of 33,520.82 whereas the broader Nifty jumped 124.4 points to mark the day’s high at 10,339.15.