Volatility is back, so is the fear of another round of correction. But before worrying about what’s happening on the street, understand that, at this point, what is causing volatility is mostly not about India – it is about emerging and currency markets. It might not appear to be significant here, but for global investors, the Chinese currency, Renminbi, moving below 7.30 to the US dollar last Friday was a big deal. It also pushed the rupee lower against the dollar. For a hedge fund, whose game is based on arbitrage, these moves are significant and make a big difference in the gain or loss they make on their investments. So, while monitoring Dalal street, keep one eye on the currency market. Because any indication that the storm has passed will come from there.
