Second, Balance of Payment (BoP) parameters come under stress due to moderation in growth of major trading partners and commodity price volatility impacts macro-economic parameters, such as, inflation and fiscal deficit. Third, corporates are unable to raise foreign capital which imports financial problems from off-shore to on-shore and unhedged foreign currency exposures translate into on-balance sheet concerns impacting the credit worthiness of the corporates.
Fourth, financial institutions experience difficulties in accessing international financial markets. Fifth, monetary policies of developed countries tend to impact macro-economic parameters of the country, e.g., recent experience of announcement of tapering of asset purchase of the Federal Reserve. On May 22, 2013, Chairman Ben Bernanke first spoke of the possibility of the tapering of Fed’s purchases of securities.