Uruguayâs profile as a destination for foreign investment is looking up, with this weekâs decision by Moodyâs Investors Service to boost the countryâs investment grade. As Reuters reported, Moodyâs upgraded Uruguay from Ba1 to Baa3, citing its improved economic fundamentals
Earlier this year S&P also gave Uruguay an investment-grade rating, of BBB-minus. As Reuters noted, this enhances Uruguayâs appeal to institutional investors because some bond funds require two investment grade ratings to buy sovereign debt.
This puts Uruguay in the company of several other Latin American countries that boast investment grade ratings, including Mexico, Peru, Colombia, Chile and Brazil. The head of Uruguayâs debt unit, part of the Economy Ministry, told Reuters the country was enjoying healthy activity in bond trading even before Moodyâs increased its rating due to steady improvements in its economy.
Uruguayâs economy grew 4.2 percent in 2012âs first quarter, vs. the year-earlier Q1. Its gross domestic product rose 5.7 percent last year, the ninth consecutive year of growth.
As an anti-inflationary measure, earlier this month Uruguayâs central bank increased its reserve requirements for deposits in pesos from 15 percent to 20 percent. For foreign currency, the rate was increased from 27 percent to 40 percent. Bloomberg reported that inflation hit 8 percent in Uruguay last month, up from 7.5 percent in March.
In a sign inflationary pressure may be easing, the Wall Street Journal reported Uruguayâs consumer price index rose 7.48 percent in July, far less than the 8.25 percent increase reported last July.