UNCERTAINTY THE NEW GLOBAL FINANCIAL FORMULA

While the financial world was still panting over it’s stock market crash, China devalued its currency. To boost exports and fight excess production capacity, China is doing everything to prop up it’s slowing economy. US on the other hand is going to tighten its monetary policy in the current year to stimulate inflation and strengthen dollar further. Next, Europe, also going through the ‘green shoots’ phenomena like us, needs to spoon feed its economy for the next two years. Thus in such divergent economic scenarios, global financial markets are expected to be volatile. Every country is thinking about its currency and fencing its domestic market.

That time is not far, when every country would follow, ‘Beggar Thy Neighbour’ policy. India does stand out with un-manipulated currency and strong forex reserves. Thus when everyone is busy putting barricades in the name of free trade, we should at least protect our domestic industries whether it is steel, copper, iron ore, tyre to name a new. When it comes to currency management, RBI is well equipped to face any kind of volatility pressure on the rupee. Stock market daily movements indicate global uncertainty more than domestic economic performance and thus 1-2% movement of indices have become norm of the day. As for informed investors, volatility means opportunity as only Fundamentals Create Wealth.