Downgrade nerves grow

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India and Indonesia are not at immediate risk of credit rating downgrades, Fitch said yesterday, but it warned it could act if the countries’ governments fail to calm the current financial market tensions.

Fitch rates both India and Indonesia BBB- with a stable outlook but the recent sharp sell-off in emerging markets, sparked by worries of a scaling back of cheap US financial stimulus, has put the countries in the spotlight.

The rating agency said that with currency reserves still ample despite the downward trajectory, and both governments trying to mend economic imbalances, the market turbulence was not “a trigger for rating action at this point”.

Andrew Colquhoun, Fitch’s senior director for sovereigns in the region, said fears of an imminent balance of payments crisis were misplaced given the current positions but stressed authorities needed to ensure market concerns were dealt with.