The current upgrade follows the December upgrade of long term and short term sovereign rupee bonds. Moody's had then upgraded short term and long term government bonds denominated in domestic currency to P-3 from NP (not prime).
The ratings upgrade by Moody's comes as a relief for Indian economy which is currently facing headwinds from weak global macro-economic conditions and policy paralysis of the Indian government. The prevailing high level of interest rates have made domestic borrowing expensive for Indian companies. This upgrade will help Indian companies to borrow abroad at lower interest rates.
The ratings upgrade may also increase the inflow of dollar deposits in the country which may arrest the decline of Indian rupee against the dollar. The rupee was the second worst performer against the dollar, after the Argentinean Peso, in 2011.
Dion Global Solutions Ltd