Ksaeconomistsseeplus Indian expats pointsinratingsupgrade elated as riyal fetches Rs. 15
Economists expect the Saudi sovereign rating to be upgraded by one notch this year, which will bring the country’s ratings closer to the rest of the GCC countries.
Their predictions came after Saudi Arabia’s credit rating outlook was raised to “positive” from “stable” yesterday by Standard & Poor’s because of an improved outlook for growth.
At the same time, S&P affirmed the long- and shortterm foreign and local currency sovereign credit ratings at “AA-/A-1+”. The transfer and convertibility (T&C) assessment for Saudi Arabia is unchanged at “AA+”.
S&P believes the improved growth prospects for the nonoil sector will bolster the economy’s resilience to exogenous shocks such as a decline in oil prices.
John Sfakianakis, chief investment strategist at Masic in Saudi Arabia, said Saudi Arabia had made steady improvements to economic fundamentals.
“In particular, a steady downtrend to public debt-to-GDP brought the ratio to the third lowest in the world,” he told Arab News.
“Oil revenues and prudential macro-fiscal policies of the Ministry of Finance has also boosted net foreign assets to above 90 percent of the country’s GDP,” he added.
He said upgrade in the country’s sovereign rating will have a major impact in credit spreads and cost of foreign capital for corporates and banks. Hence there are plenty of positives.
Saudi Arabia’s AA- rating, the fourth-highest investment grade, may be raised in the next 24 months if economic growth “remains strong,” the rating company said earlier. Indian expatriates in Saudi Arabia and elsewhere across the world are rejoicing over the prospects of remitting record sums of money as the Indian rupee slumped again yesterday.
The Indian rupee dropped to its lowest level in 10 months and one Saudi riyal was fetching almost Rs. 15 yesterday.
Some Indian expatriates, however, felt the falling trend of the rupee will have an adverse impact on their national economy in the long term.
According to Reuters, the rupee closed at 56.17/18 per dollar yesterday compared to 55.9550/9650 on Tuesday. The unit fell to as much as 56.37, its lowest since July 25, 2012.