Apart from linkages with the global developments, there are several domestic factors which are also important in the context of increasing trend of volatility in domestic financial markets such as widening current account deficit, growth slowdown, growing fiscal deficit and sticky inflation, to name just a few.
The uncertainty and volatility associated with the financial markets are expected to continue at least for the foreseeable future, as the “new normal”. Managing the market risks in this context is a major challenge for the corporates and the banks alike.