(7 May 2012 – India) Standard & Poor’s downgraded India’s outlook from stable to negative last week, jeopardising the country’s long-term rating of BBB-,which is the lowest investment grade rating.The ratings agency cited slow progress on its fiscal situation and deteriorating economic indicators.
It also indicated there is a one in three chance of a downgrade to India’s credit rating if external conditions continue to deteriorate.
The Reserve Bank of India, the central bank, however, reacted to the downgrade by stating that India’s banking and financial system is strong and sometimes these ratings are discounted by markets.
It also said that it will intervene in the for-ex market only if there is high volatility in the currency market, and not because of the ratings.