MUMBAI, June 21: A two-notch downgrade of India's credit ratings by Moody's Investors Services will add to the upward pressure on the country's interest rates, bankers and economists said on Sunday.The central plank of the Reserve Bank of India's strategy for the past couple of months has been to keep a lid on interest rates in order to help push through a king-size government borrowing programme.
But the Moody's downgrade last week could stem fresh foreign currency inflows and hasten already mounting outflows, reducing the supply of funds and forcing interest rates higher, they said. Bankers believed the RBI will have to give way to the upward pressure on rates soon.
Aside from the government borrowing programme, other pressure on rates were likely to come from rising credit offtake by September.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
