Hefty rise in Nov FDI inflows; Moody's cheers up further

If trend continues, FDI in current financial yr will cross USD 30 billion: analysts

PTI | January 10, 2012



India witnessed a hefty increase of 56 per cent in foreign direct investment (FDI) in November and the positive mood was further lifted on Tuesday by the Moody's upgrading country's short-term foreign currency rating to investment grade.

The FDI inflows in November totalled USD 2.53 billion against USD 1.62 billion in the same month last year.

The cumulative flows of USD 22.83 billion for the April-November period have crossed USD 19.43 billion which came in the full fiscal of 2010-11, according to officials.

Analysts feel that if the trend continues, the FDI in the current financial year would well cross USD 30 billion, a development which will have a positive effect on rupee in the foreign exchange market.

In the face of selling pressures in the stock market from the foreign institutional investors and rising trade deficit, the rupee has declined by about 15 per cent since August.

While the FII inflows are considered "hot money", the FDI is quite stable.

The improvement in FDI inflows in November comes after two months of declining trend.

The Moody's upgraded India's short-term foreign currency rating from speculative to investment grade.

"Diverse sources of Indian growth have enhanced its resilience to global shocks", the global rating agency said, adding present slowdown "could reverse sometime in 2012-13, as inflation cools from current 9 per cent levels".

Meanwhile, the finance ministry said it has approved FDI proposals worth Rs 1935 crore.

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