New Delhi: Country’s largest bank SBI on Saturday said downgrading of the US sovereign rating by S&P would not really impact India and expressed hope that dollar would remain the dominant currency.
“Cost of borrowing for the US may go up by a few percentage points. But that would not really affect us... (its) Life as usual (for India),” SBI chairman, Pratip Chaudhary told reporters here.
Standard & Poor’s (S&P) has downgraded the US government’s ‘AAA’ sovereign credit rating, a development that will make investors lose confidence in the American economy.
S&P stated that predictability about US policy making and political institutions have weakened at a time of fiscal challenge.
US Treasury official, however, said the decision of S&P, was flawed.
Chaudhary expressed hope that the dollar would continue to remain the major currency of the world and hence there would not be any change in impact on India.
“Dollar still remains dominant and potent currency in the world,” he said. Chaudhary said since the debt crisis is in the US, so the American debt would become more expensive.
So if the US government is paying around 3% for 10-year debt currently, now they would have to pay something like 3.10 or 3.12%, he said.
Meanwhile, a senior official of another public sector bank said that one would have wait for the stock market’s reaction when it opens on Monday.
“When the markets open on Monday, we will be able to ascertain the true impact,” the official said.