India has adequate foreign exchange reserves and its current account deficit is likely to remain at sustainable levels, limiting any risk to the country's sovereign rating from external pressures, Fitch Ratings said on Wednesday.
"India's external buffers appear sufficient to cushion risks associated with rapid monetary policy tightening in the US and high global commodity prices," Fitch said in a release.
The ratings agency added that India's public finances remain the key driver of the country's sovereign rating and its limited reliance on external financing helps.
The Indian rupee fell to a record low on Wednesday and has declined more than 11 per cent so far this year.
The country's forex reserves are down by $101 billion since January, but are still large, said Fitch.
The reserve cover remains strong at about 8.9 months of imports, higher than the 6.5 months in 2013 when the rupee was pressured by concerns about a withdrawl of global monetary policy accommodation.
The strong cover gives authorities the scope to utilise reserves to smooth over periods of external stress, the rating agency added.
Fitch sees India's current account deficit at 3.4 per cent of GDP in the current financial year.
"We expect India's current account deficit will be wider in the next few years, than it was in the period prior to the pandemic."
(Published 19 October 2022, 10:42 IST)
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