Indian government tries to attract foreign capital after foreign funds sold a net worth of US$300M Indian shares in 2011 to date, helping to make the rupee the worst-performing Asian currency this year
December 21, 2011
– The Indian government is trying to attract foreign capital after foreign funds sold a net worth of US$300 million Indian shares in 2011 to date, which contributed to the devaluation of the rupee and helped make it the worst-performing Asian currency of 2011, Reuters reported on Dec. 21.
In 2010, foreign funds invested a record $29 billion in Indian shares.
The rupee, which was the worst performing Asian currency of 2011, fell almost 20% in comparison to the heights that it reached in July.
Moody’s Corp., which announced that it had combined India’s foreign and local currency bond ratings at Baa3, reported that India’s ratings were stable.
"We are looking at all options to attract capital inflows... what is happening right now is a temporary phenomenon," said an unidentified official.
"We believe Moody's action will make other rating agencies examine their methodology and look at India positively. India deserves at least two notches rating upgrade.”
He added that, in an effort to make bonds more appealing for foreign investors, the government was considering reducing some infrastructure bonds’ lock-in period from three years to one year as well their residual maturity.
The official also said that the government is confident that, over the long term, India would able to attract a healthy flow of funding from foreign institutional investors.
In December, the Indian government revised its earlier estimate that the Indian economy would grow by 9% during the fiscal year that will end next March to a projected growth rate of 7.25%-7.75%.
The primary source of this article is Reuters, London, England, on Dec. 21, 2011.