Funding faux pas: Rupee suffered 7pc drop after govt said it planned to seek IMF bailout
Sri Lanka, Armenia and Pakistan top the list of smaller emerging economies most vulnerable to refinancing risks, because they face a combination of large upcoming repayments and low foreign currency reserves, ratings agency Moody’s said on Wednesday.
While the sovereign credit ratings of Sri Lanka, Armenia and Pakistan reflected how vulnerable they are, a further hit to their foreign currency reserves could raise the risk of lower capital inflows and higher refinancing costs. That in turn could spell a cloud over credit ratings, said Moody’s.
Pakistan’s rupee suffered a seven per cent drop on Tuesday in an apparent central bank devaluation after the government said on Monday it planned to seek a bailout from the International Monetary Fund.