The real cost of capital because of risk is higher in a weaker currency country. Countries with weaker currencies apparently hold hard currency reserves because they perceive that the insurance value of those reserves at least equal they re cost in real resources. Reserves, like every other economic asset, have value but involve cost.
Healthy development of the private placement market calls for more transparency, better disclosure and protection of investor interests. A liberalised and integrated market environment also means that risks get transmitted from one segment of the market to another more rapidly. Market participants have to ensure that proper risk management systems are in place. In India, banks are the major players in the financial markets.