The Indian rupee may weaken to 75 per US dollar by FY19 end as credit tightening and dollar strength is weighing on the domestic currency, Fitch Ratings said. In addition, India’s FY19 GDP forecast has been cut to 7.2 percent from 7.8 percent on weak liquidity and high financing costs by the global rating agency. Similarly, India’s FY20 GDP forecast has been slashed to 7 percent from 7.3 percent and FY21 GDP forecast to 7.1 percent from 7.3 percent by Fitch Ratings.
On Wednesday, in its fifth bi-monthly policy, RBI projected GDP growth for 2018-19 at 7.4 percent (7.2-7.3 percent in H2) as in the October policy, and for H1 2019-20 at 7.5 percent, with risks somewhat to the downside.
“The demand outlook as reported by firms polled in the Reserve Bank’s IOS has improved in Q4. Based on an overall assessment, GDP growth for 2018-19 has been projected at 7.4 percent (7.2-7.3 per cent in H2) as in the October policy, and for H1:2019-20 at 7.5 percent, with risks somewhat to the downside,” RBI MPC said.
Meanwhile, Fitch Ratings in November this year had kept India’s sovereign rating unchanged at the lowest investment grade of ‘BBB-minus’ with stable outlook.
“India’s ratings balance a strong medium-term growth outlook and favourable external balances relative to peers with weak fiscal finances, a fragile financial sector and some lagging structural factors,” Fitch had said in a statement.